Earnings call transcript: R. Stahl AG Q3 2025 sees profit rise despite sales dip

R. Stahl AG reported its earnings for the third quarter of 2025, showing a mixed financial picture. Despite a decline in sales, the company managed to increase its net profit and earnings per share (EPS). The stock price remained unchanged following the announcement, reflecting a cautious investor sentiment amidst broader economic challenges.

Key Takeaways

• R. Stahl AG’s net profit rose to €2.6 million, up from €1.8 million in the same quarter last year.
• Sales fell by 10.1% to €78.6 million, highlighting weak demand across key markets.
• The company improved its EBITDA pre-margin to 40.4%, despite a drop in order intake.
• Free cash flow significantly decreased, and net debt increased to €40.5 million.

Company Performance

R. Stahl AG’s performance in Q3 2025 was marked by a significant improvement in profitability metrics, even as the company faced declining sales. The increase in net profit and EPS was achieved against a backdrop of challenging market conditions, particularly in the chemical, pharmaceutical, and energy sectors. The company’s focus on operational efficiency and cost reduction measures contributed to these gains.

Financial Highlights

• Revenue: €78.6 million, down 10.1% year-over-year
• Earnings per share: €0.39, up from €0.28 in Q3 2024
• Net profit: €2.6 million, compared to €1.8 million in the previous year
• Free cash flow: €0.5 million, down from €6 million
• Net debt: Increased to €40.5 million from €29 million

Outlook & Guidance

R. Stahl AG projects its 2025 sales to be between €320 million and €330 million, with EBITDA pre expected to range from €25 million to €30 million. The company anticipates a balanced free cash flow and a slight decrease in its equity ratio. The outlook remains cautious due to economic uncertainties, geopolitical conflicts, and environmental challenges.

Executive Commentary

Dr. Mathias Hallmann, Group CEO, noted, "We typically are late in the cycle," indicating that any recovery in the general industry could take time to reflect in the company’s results. He also emphasized the importance of cost efficiency, stating, "The light can also be the incoming train," underscoring the need for cautious optimism.

Risks and Challenges

• Economic development remains unpredictable, affecting demand in key markets.
• Geopolitical conflicts pose risks to global supply chains and market stability.
• Environmental challenges may lead to increased regulatory pressures and costs.
• The company faces vulnerabilities due to its reliance on the chemical and energy industries, which are currently under pressure.

R. Stahl AG’s Q3 2025 earnings highlight the company’s resilience in improving profitability despite facing significant market headwinds. The focus on operational efficiencies and strategic cost reductions will be critical as the company navigates ongoing economic challenges.

Full transcript - R. Stahl AG NA O.N. (RSL2) Q3 2025:

Moira, Call Operator: Ladies and gentlemen, welcome to the R. STAHL Investors and Analysts Conference call for Q3 2025. I am Moira, the call’s co-operator. I would like to remind you that all participants will be in listen-only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing Star and 1 on your telephone. For operator assistance, please press Star and 0. The conference must not be recorded for publication or broadcast. At this time, it’s my pleasure to hand over to Judith Schäuble. Please go ahead.

Judith Schäuble, Unknown, R. STAHL: Thank you, Moira. Ladies and gentlemen, a welcome also from my side, and thank you for joining our today’s conference call. Our prepared slides are available under the Investor Relations section of our website, www.r-stahl.com. Shortly after we will have finished this call, a replay of the entire conference will be provided for download at the same place. Please be aware of our disclaimer statement, which you find at the beginning of the slide deck. Next to me is the entire management board. New joining, Dr. Klaus Bischoff, Tobias Popp, and Dr. Mathias Hallmann, our group’s CEO, who will now walk you through our presentation.

Dr. Mathias Hallmann, Group CEO, R. STAHL: Okay. Good morning, ladies and gentlemen. Warm welcome from my side to this Q3 2025. Analysts, investors, and press conference call. As always, we start with a quick summary. Our order intake in Q3 remained at a low level of EUR 72.2 million. Prior year, we had EUR 74.4 million, but we also have in mind that in the first quarter this year, we had roughly EUR 98 million. Second quarter, third quarter were significantly lower, and we see weak demand from nearly all customer industries in all regions. That resulted in decreasing sales in all regions, with a year-on-year decline of 10.1% to EUR 78.6 million. Nevertheless, EBITDA pre improved by 28.8% to EUR 11.3 million because of cost reduction measures. EBITDA pre-margin resulted at 40.4%. Free cash flow fell by EUR 5.5 million to EUR 0.5 million, mainly due to build-up of working capital.

We come to that later. Net profit increased to EUR 2.6 million. Prior year was EUR 1.8 million, and earnings per share ended at EUR 0.39. Prior year EUR 0.28. When you look into the details, you see the sales decline in all regions. Germany down 15.9%, Central region down minus 3.5%, America down 11.4%, and Asia-Pacific down 17.3%. What is new to us is that especially Germany, which remained stable through all the crises in the last couple of years, this time shows a significant decline. We have to admit that not only our core industry, the chemical industry, is still under significant pressure, but also the pharmaceutical industry is getting under more and more pressure due to the global uncertainties with respect to taxes. Americas, the oil and gas industry, especially under pressure, and Asia-Pacific, no decisions on any big investments at this point of time.

When we look into our P&L statement, we see a total operating performance, which is almost on the level of last year. Here we also see the workup of working capital, which is due to big projects we booked in Q1, and we have some finished goods or significant finished goods already in our warehouses for those projects which are about to be delivered partly in Q4 and in Q1 2026. Custom materials are still well under control, a little bit a higher ratio due to the build-up of unfinished and finished goods. Personnel costs include EUR 2.2 million of severance payments. Without those, they would fall by EUR 0.8 million despite significant wage increases across the world. We see here the impact of our cost measures with respect to personnel.

We also see it in our other operating expenses, which came down from EUR 15.9 million to EUR 14.6 million. That results in a stable EBIT, stable EBT, and then improved net profit of EUR 2.6 million. The other numbers we already discussed. Free cash flow, the major impact comes from changes in working capital, minus EUR 3.9 million, so that cash flow from operating activities is down EUR 6 million. Free cash flow is on the level of EUR 0.5 million then in comparison to EUR 6 million last year. Our net debt is increasing to EUR 40.5 million from EUR 29 million last year. We are working on structural measures to adjust to the ongoing weak market demands. In Germany, we started a socially bound structural personnel adjustment program using the tool of a Transfergesellschaft.

Seventy-three employees are or will be transferred into this Transfergesellschaft until end of February 2026. That means 73 employees have signed agreements. I think 58 of those are already in the Transfergesellschaft at this point of time. Total one-time costs are slightly lower than EUR 5 million and will finally lead to a personnel cost reduction slightly above EUR 6 million at this point of time. We are planning additional personnel cost measures, and some of them are already implemented. We have partial reduction of weekly working hours starting this month, and we have closing weeks, closing days around Christmas. We also have tight expense control. Travel is limited to the absolute necessary, and other operating expenses in total are under tight observation and control. Our outlook, our guidance for 2025 remains stable. Sales forecast is around EUR 320 million-EUR 330 million.

EBITDA pre is still expected between EUR 25 million and EUR 30 million. Free cash flow should be balanced. We would expect a slight decrease of our equity ratio as long as pension stays or the interest rate for the pension provision stays stable. The risk we all know is the general economic development, the geopolitical conflict, and some environmental risks. This is ongoing. We have to manage that since quite a while, so nothing changed. That is it from my side. Now, I and also my two colleagues are open for questions.

Moira, Call Operator: We will now begin the question-and-answer session. Anyone who wishes to ask a question may press Star and 1 on their touch-on telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press Star and 2. Participants are requested to use only handsets while asking a question. Anyone who has a question may press Star and 1 at this time. The first question comes from the line of Nico Lochner from Solventis. Please go ahead.

Good morning, Innsbruck around. I have a few questions. You said the demand was weak from almost all customer industries. Which industries performed better then? Or had a positive development then?

Dr. Mathias Hallmann, Group CEO, R. STAHL: I cannot really see. I mean, we have one industry which remains pretty stable. That’s LNG as part of the energy industry. All the others, especially the chemical industry in Europe, the pharmaceutical industry. On a global level. India is very soft in the pharmaceutical sector. Oil and gas is particularly under pressure in North America. The only highlight at this point of time, I would see in the LNG industry.

Do you expect additional costs related to the cost-cutting program in Q4 and 2026?

We will see additional costs. With respect to the cost-cutting program, as you see, what we achieved in the first wave was pretty, yeah, the cost was pretty much under control, but we would probably see similar ratios. I have no numbers in mind how many people we might reduce in the future. For example, if we have to reduce another 20-30, then we would also see additional costs in the range of EUR 2 million-EUR 3 million. This ratio will be stable, but we have not decided yet what is the final amount of people we have to reduce. We still hope that the economical situation will improve. We can do more about temporary work hour reduction. If we come to the final conclusion that it is not going to improve in the next 6-12 months, we will probably go more into the structural direction.

You see no light at the end of the tunnel currently?

You know that saying. The light can also be the incoming train. I do not know. I do not know whether it is the light at the end of the tunnel or it is the incoming train. We were expecting improvements, for example, in the chemical industry. What we see now, and it is communicated in the press, is that it goes further down. I cannot see significant improvement in the pharmaceutical industry as long as our friend Trump is not giving away his taxes, his huge taxes, for example, for India and China. Also, when we look in the channel of our machine builders, which is a strong distribution channel for us, and they do equipment for the chemical, for the pharmaceutical, and for the oil and gas industry, their order pipelines are getting dry at this point of time.

Despite the fact that some optimism is there in the general industry, we also have to admit that we typically are late in the cycle. If the general industry is going to improve in the next six months, it will probably last another six plus nine months more until we have those effects in our book.

You want to achieve a balanced free cash flow this year.

Yes.

Is it mainly the reduction of the inventories to reach?

Yeah, it’s.

Or other arrivals?

It’s a reduction of inventories. Plus, deliveries of big projects. Which is finished goods, which will then be delivered, hopefully, in Q4 to our customers.

Okay. Thank you very much.

Welcome.

Moira, Call Operator: As a reminder, if you wish to register for a question, please press Star and 1 on your telephone. The next question comes from the line of Harald Hof from MWB Research. Please go ahead.

Hello everybody, and thank you for taking my question this morning. I would like to do it also one by one. I would like to start with the first question regarding the order momentum in Q4. Can you put some light or provide a little bit more color on this topic? Is it still going on weak, or do you see at least a stable development compared to?

Dr. Mathias Hallmann, Group CEO, R. STAHL: Stable on a low level.

Stable on a low level.

Yeah.

Do you see any kind of change in behavior regarding the year 2026? Do you expect recovery from the different industries, or do you still have the impression that the order momentum and also the revenue generation will be weaker?

Our planning scenario is that we remain on the level we have right now. The answer is basically the same I just gave to Mr. Lochner, yeah? Even when the general industry may improve and some of the political uncertainties disappear. It will take another 6-12 months until we see those effects in our books.

Okay. Thanks. We’ve discussed the pharmaceutical industries already. For your question regarding this topic, do you have any reason why the pharmaceutical industry is weak? Because it’s normally a quite stable industry. It’s also part of Trump’s relocation to the America first situation that the new production facilities are expected to be relocated in the US?

I give you one very specific example. I was in India last week. The pharmaceutical industry is our biggest customer industry in India, and 50% of their volumes go to the North American market. They are significantly down because they have, I think, 35% of taxes. That is bringing significant pressure on them. Investments are not really taking place in the same amount in the U.S. at this point of time. I mean, those plans, they need time. You also need the people doing it. At the end of the day, the whole industry is slowing down in this uncertain situation.

Okay. Thanks. That’s quite specific. Example and makes it quite understandable what’s going on. A final question from my side regarding Q4. Looking at the severance payments, you provided on the slide that it will be like EUR 5 million. Full effect. We saw in the nine months, EUR 3.6 million. So we could expect EUR 1.4 million for Q4. Is it?

No, no, no. The EUR 5 million we used for the 32 contracts signed. Those will have an impact of EUR 6 million-plus in cost savings. Not completely next year, but when they are all implemented. By the end of the first quarter next year, we have that full impact in the P&L. We do not know at this point of time what impact we will see from additional measures because, as I just explained, we hope that we can dive through certain phases with other measures, like reduced working hours. We will need a certain portion of structural measures. The final decision, how much each has to contribute, is not taken right now. We would expect the ratio will be similar, that we spend less in one-time costs than we save in cost reduction.

Okay. Thanks for answering my question.

Welcome.

Moira, Call Operator: For any further questions, please press Star and 1 on your telephone. Star and 1. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Judith Schäuble for any closing remarks.

Judith Schäuble, Unknown, R. STAHL: Ladies and gentlemen, thank you for joining our today’s conference call. With this quarterly statement, we disclose the final financial calendar for 2026. On February 24th, we will publish the preliminary figures for fiscal 2025. On April 16th, we will be the next conference call after publishing the annual report. We hope to talk to you again later on this occasion. Have a great day. Goodbye.

Moira, Call Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Coruscall, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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