Bertrandt Aktiengesellschaft (BDT) Earnings Call Transcript

Good morning, ladies and gentlemen, and a warm welcome to today's 9M 2025/2026 Investor Call of the Bertrandt AG. I'm delighted to welcome the CFO, Markus Ruf; and Head of Investor Relations, Marc-Rene Tonn, who will guide us through the presentation. [Operator Instructions] With this said, I hand over to you, Mr. Tonn. The stage is yours.

Yes. Thank you very much. Thank you very much, everyone, for joining us today. And without a lot of further ado, I would just directly hand over to our CFO, Markus Ruf, for today's presentation.

So thank you. Also, a warm welcome from my side. And let's start with the general conditions. And as you know, especially the automotive industry is under pressure, and there are a lot of market environment impacted by geopolitical tensions. But also, we have seen a lot of profit warnings from our customers in the last 9 months, in the first 6 months of the calendar year and also announcement of redundancy programs. But also, we see a much higher order income in the last 9 months, more than 30% ahead of the prior year. So I think it's a really positive indicator. And we see also the challenging Q3 as expected because based on lower working days, there were only 58 working days in the last quarter. And we see also positive effects from our cost optimization program, and we extended our cost optimization program up to EUR 120 million, and we are in a good way. And we see also operating cash flow with EUR 23.2 million, clearly positive and also a strong Q4 result expected. Further, equity ratio at 41.4%, so on a very solid level. On the next slide, as I mentioned, you can see the automotive industry is under pressure, and there were redundancy announcements from all our main customers in Europe. But we see also -- now it is clear what happens, and I think it is also easier for the next decisions.

On the next slide, what we have seen in the second quarter is an overall reduction in R&D spending by the German OEMs by 7.5% compared to the previous year. A decision the OEMs made in light of, let's say, weaker revenues, which they had also, let's say, were experiencing in the second quarter. On the other hand, when we look at the P&L development at the OEMs, the R&D cost ratio is frequently still increasing despite lower spending as they have to cope with the depreciation of former capitalized R&D. So they decided, in some cases, to cut on the spending, to have some relief on the cost side because, of course, on the D&A side, they can't do a lot. However, when we look at this figure, 7.5% down in the second quarter for the R&D spending overall, that's a bit more than what we had, let's say, as a loss in revenues, which was more in the direction of 5%. So we were much more aligned to this trend when compared to the previous quarters.

So 9 months at a glance, we have generated total sales of EUR 672 million. So in comparison to the previous year, minus from 9%. Employees, 11,537, so impacted by the redundancy program. The EBIT from minus EUR 28.9 million after EUR 38.9 million in the previous year. And as I mentioned, a positive operating cash flow from EUR 23.2 million and the equity from EUR 269 million with an equity ratio from 41.4%. So Q3 at a glance. So we have generated sales of EUR 215 million, but please consider it is the quarter with the lowest working days, only 58 working days. And I will show you later, in the next quarter, we have 66 working days. And we have achieved EBIT from minus EUR 15.8 million after EUR 24.6 million in the previous year. EPS from minus EUR 1.89 and free cash flow from EUR 14.8 million and investment from around about EUR 10 million, especially in e-mobility and in AI. So on the next slide, you can see revenue decline, moderating in Q3. So first of all, so you can see the redundancy program. We are coming from 14,526 employees, '23/'24. And now we have 11,537 and year-on-year minus 1,000 employees. And we see also in the development from the quarters, we started as expected in the current financial year. And we see also for the next Q4, a strong Q4 with 6 working days plus in comparison to the Q3. And last year, we achieved EUR 235.9 million. And so we see there's much more potential for revenues in Q4, and every working day means around about EUR 3.5 million more revenue and EBIT level. On the next slide, you can see we are in a good way with our diversification strategy. So strong growth in the aerospace/defense area with 18% year-on-year. And there are also a lot of projects in the pipeline. So we confirmed our statement from the Capital Market Day. The intention is up to EUR 300 million until 2030. And as I mentioned, so also midterm our strategic target, so 20%, 25% -- [ 30% ] outside of automotive industry is absolutely in the corridor. Our EBIT benefits from cost savings while weak call-offs weigh. And on the right side, you can see we started as expected in the current fiscal year, Q1, with breakeven, but then Q3 and Q4 (sic) [ Q2 and Q3 ] are much weaker than expected. And last year, we achieved in the Q4 positive EBIT volume from EUR 3.4 million. As I mentioned, so based on much higher working days, we expect also a much better Q4. And you see also all cost items reduced in line with sales trend. And as I mentioned, so also additional cost optimization effects from around about EUR 15 million for H2 in comparison to H1. So some more details on our profit and loss account. So as you can see, around about 9% minus, total sales minus EUR 70.3 million and especially lower call-offs. But today, as I mentioned, we see much higher order income, and we see also the optimization from the personnel expenses. So coming from EUR 595 million down to EUR 535 million. So it reflects the reduction of head count and our lower restructuring expenses. And you can also see the other operating expenses coming from EUR 67.5 million down to EUR 53.8 million. So I think I'm satisfied with our cost optimization program. Our problem more is the top line. So stable balance sheet. There is no structural shift in our balance sheet. And so we are working -- with working capital management was successful. And our equity ratio, as I mentioned, was 41.4%. So there's no structural change in the balance sheet.

Talking about the forecast for the current fiscal year. So the environment overall is still challenging with, let's say, weak growth outlook for Germany, perhaps outside the car industry or just overall for the economy. The infrastructure programs, which are just starting, may provide some support. But what we've generally seen that with the outbreak of the Iran war or the Iran conflict, that the expectations for general economic growth have been reduced. Our customers, as said previously, react to, let's say, a challenging environment of, let's say, weaker economic growth, lower volume sales, particularly in China, with cost-cutting measures on the personnel side and also on the CapEx side and on our side with reduced capacity call-offs, which are still volatile. On the other hand, as already mentioned, we had this very pleasing development of the order intake, which provides, let's say, some cautious optimism, I think, for the future that things may turn to the positive. And on the other hand, we also see, let's say, a structurally well-intact environment for R&D spending overall, given, let's say, the challenges the industry is facing with the transformation towards autonomous vehicles, electrification, digitalization, all these trends are still fully intact.

And I think a really positive indicator is the order income. So as I mentioned, we can see from -- in the last 9 months from EUR 800 million to EUR 1.1 billion, up to 30%. I think it's a really good basis for the next quarters, and we see there are much more projects in pipeline. And additionally, we have last week also a large-sized project. And so we see, or we expect, there is a normalization from the call-offs after the holidays and after the announcement from the redundancy programs, and we hope so, then we have a normalization. So summary outlook. So incoming orders in the last 9 months significantly up year-on-year. So we expect a normalization, a stabilization from the call-offs. We see also there's also continued trend to spend on R&D, and outsourcing expected to structurally increase again. And we will also see -- additionally, we will benefit from concentration of ESP landscape. Today, there is a consolidation on the engineering service provider list from BMW, also VW and Audi, and Bertrandt is one of the major ESPs. We see also internationalization offers additional potential with existing and new customers. So last year, we opened a site in Sweden. Now we received some new contracts. So we see it's also on a good way. And we see also, as I mentioned, diversification to support growth and resilience, especially in the aero and defense sector, and we see a strong growth and also much more potential up to EUR 300 million. And also, AI initiatives in various fields are implemented in collaboration with diverse partners, like IBM or Microsoft. And also, we see our cost optimization program is on the way, and we are satisfied with the effects of our cost optimization programs. So our revised forecast total revenues, so we see moderately down year-on-year. We see also our EBIT for '25/'26, as I mentioned, significantly up year-on-year, positive value uncertain. We have seen after 9 months, minus EUR 28 million as a positive Q4, then we are better than in the last fiscal year, and we expect also positive operating cash flow.

Yes, I think with that, we come to the end of the presentation and would hand over to the moderator.

[Operator Instructions] So far, we have not received any risen hands or any questions in our chat box. [Operator Instructions] We have one risen hand by [ Mr. Webb ]. [Operator Instructions]