Q1 prelims: Weak macro still weighs on business operations

To recap, Q4 burdened by a particularly weak December. Q4 group sales were down 7.8% yoy at € 41.9m as a result of a particularly weak Functional Fillers segment (-10.5% to € 30.4m), as demand for fine hydrates (core product) experienced a significant slowdown during the last few weeks of the year. This should have largely been driven by cautious order behaviour of key customers. Specialty Alumina recorded a slight sales increase (0.6% yoy to € 11.5m) as demand should have bottomed our. FY25 sales down 3.2% yoy to € 197m.

This coupled with temporary elevated maintenance costs at the group’s German plant triggered a 9.4pp EBIT margin decline to a mere 2.8%. FY25 EBIT margin of 7.7%.

The operating cash flow of € 15.8m (vs € 35m in FY24) reflects the weaker operating performance but also some working capital outflows. Elevated investments into production capacity build-outs (mainly for the viscosity optimized gap fillers) pushed FCF into negative territories (€ -9m). Nevertheless, cash at the end of the year stood at € 72.3m; net debt of € 18m.

First look into FY26e, challenges prevail, yet with improvements in sight. Nabaltec also published preliminary Q1 figures with € 53.2m sales (-2.7% yoy) and an EBIT margin of 5.2% (-2.3pp yoy) as demand across the group’s products remains subdued and higher energy prices, particularly gas, and rising depreciation (due to recent investments) burden the bottom line.

Positively, demand for fine hydrates is seen to sequentially improve carried by low inventories but also rising investments into data centers. This is also inline with recent comments from Nexans’ (major European cable producer) management, which highlighted a demand pick-up across France, Italy and Spain during recent weeks.

FY26 guidance confirmed. Management expects to grow the company’s top-line by 4-6% (eNuW: 4.2%, 6.8% implied growth during Q2-Q4), anticipating higher sales volumes for ATH (higher demand across key end markets) but also the gap filler (eNuW: Functional Fillers +6%). We model largely flat sales for Specialty Alumina (high refractory exposure) as slightly higher volumes compensate for lower sales prices. The lower end of the EBIT margin guidance of 5-7% seen rather conservative (eNuW) but also factors in uncertainties from the scheduled maintenance at the waste incineration plant next to its site in Germany (key supplier of production relevant steam). Longer disruptions would require NTG to produce their own steam using LNG, which currently experiencing significant price increases.

We confirm our BUY rating with an unchanged € 16 PT based on FCFY26e.