NORMA Group SE (NOEJF) (Q3 2026) Earnings Call Highlights: Adjusted EBIT Doubles as ...

Negative Points

• APAC sales declined 9% on comparable FX basis due to weak automotive demand in China, with adjusted EBIT margin falling 1.2 percentage points.

• Material cost ratio increased to 46.1% in Q3, up 2.5 percentage points from Q2, driven by tariffs and geopolitical pressures.

• Year-to-date net operating cash flow was negative EUR2.9 million, impacted by one-off effects from the Water Management divestment.

• Q4 margin implied by full-year guidance could be below the full-year range, with potential for a loss at the low end, though management does not currently expect a loss.

• Cost inflation pressures persist, particularly from tariffs in the Americas and energy costs in EMEA, requiring ongoing countermeasures.

Q & A Highlights

Q: With the full-year guidance confirmed, the implied Q4 margin could fall below the full-year range even to an adjusted EBIT loss of about EUR5 million at the low end. Is there anything to prevent a Q4 loss, and what cost savings do you expect in the final quarter? A: CFO Okan Celiker said Q4 is always seasonally slower than the first three quarters and this is already reflected in the forecast, with the challenging market situation also considered. On Wave 1 savings, he said the company still expects the communicated incremental EUR15 million, of which EUR11.4 million was already delivered in the first nine months, leaving roughly EUR4 million for Q4. CEO Birgit Seeger added that, as of today, the company does not see a loss for the fourth quarter and no special effect is currently expected. When an analyst suggested the low end of the guidance is extremely conservative, Seeger said she could not oppose that conclusion.

Q: The material cost ratio rose to 46.1% in Q3, about 2.5 percentage points above Q2, despite nine-month improvement. What is driving this? A: CFO Okan Celiker acknowledged the material cost ratio was a clear headwind in the quarter but said the situation is not fundamentally different from the rest of the year. He cited tariffs pressuring material prices in the Americas and the Iran and Ukraine wars affecting EMEA, primarily through gasoline prices. He said countermeasures are being defined and will continue in Q4 and into 2027.

Q: At the Strategy Update, you indicated part of the Wave 2 charges could be booked in Q4. What is the timing for Wave 2 and EMEA footprint charges? A: CFO Okan Celiker confirmed it remains the goal to book an accrual for Wave 2 and potentially EMEA footprint measures in Q4 2026. He said the team is working to have everything in place to book the accrual this year, while the total EUR29 million of 2026 adjustments (EUR24 million transformation, EUR5 million PPA amortization) is unchanged.

Q: APAC sales fell 9% on continued weak automotive demand in China and the APAC margin declined. What measures are you taking to stabilize the region, or are you reducing exposure? A: CEO Birgit Seeger said the company has strengthened its team and sent experienced colleagues to China, where it now has a fully-fledged team working on the issue. She pointed to the Q3 nomination from a Chinese OEM for a cooling system connector, with start of production in the next quarter, as evidence that NORMA can meet China's speed and is working to improve APAC performance.

Q: Are you seeing cost inflationary pressure picking up, and what do you expect for 2027? A: CEO Birgit Seeger said NORMA does see cost inflation pressure and is working heavily on countermeasures. She emphasized that many measures and initiatives are in the company's own hands and are intended to support a good 2027 and confirm the financial year 2031 journey presented at the Strategy Update.

Q: What were the key drivers behind the doubling of adjusted EBIT in Q3? A: CFO Okan Celiker said adjusted EBIT more than doubled to EUR7.8 million, with the margin rising from 1.9% to 3.7%. Volume and price effects contributed EUR3.8 million, partly offset by EUR2.9 million of negative material cost effects. Personnel costs and other OPEX contributed a combined EUR2.3 million from cost management and the transformation, with D&A and FX providing further support. The NewNORMA Wave 1 transformation delivered a positive net earnings contribution of EUR5.3 million in Q3 and EUR11.4 million cumulatively in the first nine months.

Q: How did the two strategic business units and the regions perform in Q3? A: CFO Okan Celiker said Industry Applications grew 11.3% on a comparable FX basis, driven by EUR7 million of volume and price contribution, with reported sales up 12.4% to EUR70.2 million. Mobility & New Energy returned to slight growth of 0.9% on a comparable FX basis, with reported sales up 1.9% to EUR137.6 million, as positive Americas and EMEA developments were partly offset by declining APAC sales. By region, the Americas grew 13% on a comparable FX basis with the adjusted EBIT margin up 3.9 percentage points to 8.4%; EMEA sales rose 2.4% with the margin improving 3.6 percentage points to 2.7%; APAC sales fell 9% and the margin declined 1.2 percentage points to 9.1%.

Q: What is the status of the CFO transition announced this morning? A: CEO Birgit Seeger said the Supervisory Board has appointed Tobias Bichler as new CFO, starting no later than April 1, 2027. She said he brings extensive international finance and transformation experience and will continue the NewNORMA strategy, focusing on profitability, cash generation and disciplined capital allocation. She thanked current CFO Okan Celiker, who will remain in his role until Bichler joins and ensure a smooth handover.

Q: What is the outlook for full-year 2026 and the midterm ambition for 2031? A: CEO Birgit Seeger confirmed the 2026 guidance of 0% to 2% net sales growth on comparable FX rates, an adjusted EBIT margin of 2% to 4%, and net operating cash flow of EUR10 million to EUR20 million. For 2031, she reiterated the ambition of 1% to 3% net sales CAGR, an adjusted EBIT margin above 10% and cash conversion above 70%, supported by Wave 1, Wave 2 and the EMEA footprint measures.

Q: How did cash flow develop in Q3, and what role did supply chain financing play? A: CFO Okan Celiker said Q3 net operating cash flow was positive at EUR10.2 million, starting from adjusted EBITDA of EUR18.8 million, reduced by a EUR3 million reduction in the supply chain financing program and a EUR0.8 million change in other trade working capital items, with CapEx of EUR4.8 million. CEO Birgit Seeger noted the company is reviewing its financing instruments, including supply chain financing, alongside operational performance.For the complete transcript of the earnings call, please refer to the full earnings call transcript .