Q3 results: Bottom-line improvements warrant PT chg.

Q3 sales came in at € 163m, up slightly by 1.1% yoy (eNuW: € 170m), impacted by a solid development in SIA with revenues of € 67.5m, up 6.8% yoy (eNuW: € 67.7m) and weaker than expected SEA revenues to € 95.4m (eNuW: 102m), down 2.3% yoy. SIA sales stabilized after a weaker H1, due to ongoing sales excellence initiatives and completed destocking of customer inventories. SEA sales came in short, due to a mixed performance across product types. Forms sales slightly rose and LSR remained stable, while belting sales showed renewed softness following a weak Q1 and an improved Q2.

Q3 EBITDA stood at € 21.3m, up 28% yoy and largely in line with expectations (eNuW: € 20.8m). For SIA, fixed cost reductions and a slight margin increase were expected (eNuW: 19.5% EBITDA margin, € 13.2m EBITDA), but results came in slightly ahead with a 19.9% EBITDA margin and € 13.4m EBITDA. In case of SEA, margin improvements (better product mix and tight cost control) exceeded expectations (12.2% vs. eNuW 11.1%), which largely compensated the impact of the top line softness (EBITDA of € 11.6m vs. eNuW € 11.4m). Importantly, Q3 net income returned to positive territories (+ € 5.3m to € 2.8m).

Order intake increased slightly for both segments yoy. For SIA, muted demand in hoses (with OEMs) and profiles largely continued, yet direct sales of hoses showed a positive trend as destocking of customers seems to be over. Importantly, building permit approvals show early signs of a beginning recovery. For SEA, form demand improved for Mountain Applications, Industrial and Handrails Europe, while demand in Transport was stable, due to project delays and prioritization of defense spending over infrastructure.

Free cash flow in Q3 came in at € 8.4m, significantly higher than last year (Q3’24 € -1.2m), benefited by higher operating cash flows, lower financing costs and lower capex (parts of maintenance capex pushed into Q1’26). With the solid cash position of € 86.6m, management has access to sufficient liquidity to maintain dividends, invest in technological improvements, and participate in selective M&A activity, even in a weaker macro environment.

FY25 guidance was narrowed to pre-project cost EBITDA of € 78m (previously € 65-85m) with project costs projected at € 5m. This is well aligned with our expectations of € 78.7m, taking into account visibly lower fixed costs, enhanced margins and stronger customer demand for hydraulic hoses following the end of destocking.

Our take: Semperit appears well-positioned, mitigating end-market softness through broad market and application diversification as well as strong product quality. The ongoing cost-saving measures as well as first signs of improving end market demand position the company a the end of sustainably improving margins and cash flows. Additional potential macroeconomic tailwinds such as the planed infrastructure spending in Germany should support growth and hence a re-rating. BUY with a raised PT of € 18.5 (previously € 18.2) based on DCF.