EuroGroup Laminations S.p.A. ($EGLA)

Good afternoon, everyone, and welcome to EuroGroup Laminations Full Year 2025 Financial Results Presentation. [Operator Instructions] I now have the pleasure of handing over to Vincenza Colucci, IR Adviser. Please go ahead.

Welcome, everybody, and thanks for joining us at the EuroGroup Laminations 2025 Financial Results Conference Call. Together with me, the Group CEO, Marco Arduini; the Deputy Group CEO, Isidoro Guardalà; and the Group CFO, Matteo Perna. As usual, please note that the supporting deck and the presentation are available on the website in the IR section. Now I hand over to Marco. Please, Marco, go ahead.

Thank you very much, Vincenza. Thank you as well to all of you for attending to this meeting again. We can move to the next page. We can go to the next one, please. Thank you. When I think that 2025 was a very turbulent year and we had a big shift in geopolitics, in policy and all this as well led to major changes in the condition of the market. The result of EGLA for 2025 prove the resiliency of our business model that is well diversified and as well flexible. The revenues were reaching EUR 831 million. And this is considering as well the ForEx impact almost in line with the previous year. And in terms of performance, we reached EUR 88.7 million in term of EBITDA adjusted. If we go in the details of the businesses that we manage, E-mobility was reaching EUR 514 million of revenues. And this was down 6.1% at constant exchange rate. And the major impact, negative impact was coming from the decrease in volume in the United States and in EMEA. And we saw a further increase of our sales in China. With regards to the Industrial and Infrastructure Solution, we had a moderate revenue growth that is as well enhanced and driven by the expansion that we have made in Asia. By the fact that we started our activity in a very potential segment like the Transformer segment. So taking into account this, our total revenue were EUR 316.7 million. And this, of course, were led by the consolidation of Kumar Precision Stampings in India and by the growth in China and of course, by a mild slowdown in EMEA and North America. With regards to the performance, the margin were impacted by tariffs and by the macroeconomic uncertainty. And we had, of course, in both segments due to the lower volume, reduced operating leverage in EMEA and North America. If we look ahead and we could speak about order book and pipeline in the EV business, we have, of course, to consider the impact that the shift that we saw in policy has created, especially in North America, but as well slightly in Europe. And so the order book is now at the level of EUR 2.7 billion. And the pipeline, so meaning all the potential orders, additional orders that we have in discussion with customers is now in -- at the value of EUR 2.1 billion. With reference as well to the additional key operation and performance improvement program that we are as well following in the different region, we want to underline that we are progressing and we progressed in EMEA and in North America, the industrial efficiency program. In order to compensate the market dynamics in order to increase the flexibility and as well to structurally improve our marginality and cash flow. This operation is, of course, leading our operational excellence plan in order to as well optimize our industrial footprint and procurement. If we speak about the outlook for 2026, we estimate revenues between EUR 700 million and EUR 750 million. With regards to the margin, the EBITDA adjusted we estimate and we -- 11%. And with regards to the positive operating, we estimate a positive operating free cash flow that are including as well CapEx that are in the range of EUR 45 million. So this is the overall summary. Taking in account that 2026 is, of course, impacted by the shift and the dynamics that we saw as well in 2025. So it is considered a year of transition in order as well to register and review the different program that electrification is requiring to OEMs and players in the market. I now pass the words to Matteo that is going through the key financial results.

Yes. So thank you very much, Marco, and good evening. So let's move to the next slide, please. So in terms of sales, the total amount of consolidated sales was in the range of EUR 831 million in 2025. implying a decrease in the range of 4.4% compared to 2024 and this is as well including the ForEx effect. As we said, without taking into consideration the evolution of the ForEx mostly the euro, U.S. dollar in 2025. The revenue, the constant ForEx effect would have been EUR 853 million, implying a decrease year-over-year in the range of 1.8%. Looking at the segment's evolution. On Auto, the total amount of revenues was in the range of EUR 514.3 million, implying a reduction of 8.5%. With respect to the e-mobility sector, the ForEx effect was in the range of EUR 13.7 million. Whilst moving to the Industrial and Infrastructure Solutions segment. The ForEx effect was in the range of EUR 11.4 million. In terms of EBITDA adjusted, the total amount of EBITDA adjusted was in the range of EUR 88.7 million, implying an EBITDA adjusted margin in the range of 10.7% the total adjustments were approximately EUR 8.1 million, then we will elaborate more with respective to the details with respect to the adjustment that we accounted. The decrease in the margin, it's mostly driven by the evolution of the EV, the e-mobility segment due to the impact on the operating leverage, especially in Europe and North America. With respect to all the difficulties uncertainties that we face that in 2025, with respect to the market dynamics, and as we expect the Industrial segment. This is mostly driven by the evolution of our operation in EMEA region. Taking into consideration approximately EUR 58 million of total D&A in 2025, the EBIT was equal to EUR 22.6 million whilst in 2024 was EUR 65.7 million, and the total amount of D&A that we report in 2024 was in the range of EUR 44.6 million. And I have to say that this is as well including the right of use, EUR 10.3 million the depreciation with respect to the fixed asset in the range of EUR 45 million and the amortization of intangibles in the range of EUR 2.6 million. There is no impairment charges with respect to the total D&A that we accounted in 2025. CapEx, we accounted below EUR 69 million. So the total amount was EUR 68.9 million and this is implying a reduction with respect to the EUR 86.5 million that we reported in 2024. Moving to the next slide, please. So we've already spoken about the breakdown by segment with respect to the revenues. I have to say that now E-Mobility Solution is accounting for approximately 62% whilst the Industrial Infrastructure, it's 38%, the total amount of revenues that we generate in 2025. And if we see the breakdown by geography, and let me emphasize the fact that the breakdown by geographies is consistent with what we reported over the last quarters. It's now on the basis of the final destination of the customers. So it's now Europe accounting for approximately 52% North America, it decreased to 44%, whilst Asia, including China and India now accounts for approximately 14% compared to 7% that we reported in 2024. With respect to the E-mobility solution, we had a total number of new SOP in 2025 of approximately six SOP, of which one in Europe, three in Mexico and two in China. And the total amount of sets, motor core sets that we sold was equal to EUR 4.3 million. This has to be compared with EUR 3.8 million that we sold in 2024. With respect to the Industrial business, it's important to emphasize that the EUR 316.7 million is including the full year consolidation of Kumar, which reported total revenues in the range of EUR 48 million. And this is important to be remembered. Moving to the next slide, please. In terms of EBITDA adjusted, we said the total adjustments were EUR 8.1 million, and this is mainly making reference to extraordinary cost not related to the ordinary course of business, like meaning we had -- we are now installing a new [ ERP ] in Europe and this is part of the extraordinary cost that we are making a reference now in industrial EBITDA adjusted. And just what to say, this is as well including the completion of set -- a full settlement agreement that we reached last year with respect to litigation that we had in Russia in '20 -- starting in 2024 and then finalized in 2025. As we were saying, Kumar with respect to the EBITDA, it's contributing by approximately EUR 4 million. So this is implying an EBITDA margin in the range 8. 5%. Yes. I will move to the next slide. So on -- I have to say, the total net trade working capital at the end of December 2025, it's approximately EUR 207 million. This is including the strong cash generation that we reported in the last quarter of 2025, you see the inventory decreased from EUR 385 million at the end of September to EUR 352 million at the end of December. And as well to say that when in terms of receivables, we decreased from EUR 163 million to EUR 140 million. So now the net trade working capital is accounting for approximately 25% of revenues in 2025. Moving to the next slide. So two major comments on the net debt evolution. So as we said, the total amount of net debt reached EUR 219 million compared to EUR 226 million that we reported at the end of 2024. The EUR 219 million is including the financial lease liabilities according to IFRS 16 in the range of EUR 43 million. And it's as well including EUR 21 million in terms of cash out due to the buyback of the -- or the total 31% stake that we bought in March last year in our Chinese companies, so Euro Misi Laminations Jiaxing and as well Euro Misi High-tech and as well, EUR 1 million with respect to the buyback of the minorities for an Italian tooling company called Euroslot tools. This is as well including approximately EUR 8 million in terms of dividend distribution that we made last May. So moving to the outlook for 2026. I mean, the range that we are now reporting it with respect to the revenues, we do expect revenues to be in the range between EUR 700 million and EUR 750 million. EBITDA adjusted margin in the range of 11%. CapEx will be in the range of EUR 45 million. And as well for 2026, we do expect a positive operating free cash flow consistent with what we reported in 2025. Okay. So Marco, want to add some comment?

Yes. I think I -- that this guidance are related to mainly 2026 in view of the overall situation that we have around us, and the need as well to see the stabilization of this condition. I think the decrease in revenue is merely reflecting the shift that we anticipated happening in 2025. And the profitability is, of course, in line with the improvements as well that we have integrated in our program. CapEx is, of course, we are decreasing the level of CapEx in order to optimize as well the overall capital invested and as well in order to use the current capacity that we have. And so the -- we target to generate free cash flow positive in order to reduce further our net financial position. I don't know if Isidoro wants to add any comments?

I think that your comment was very complete and we can work also there to achieve a gather result in term of revenue and confirming and the margin that we had in last year and the work that we are doing in the CapEx reflect the need to use to fulfill the capacity that we already have in the company.

Very good. So we can then listen to all the questions that are coming from the people that are attending to this call.

[Operator Instructions] The first question today comes from Alberto Gegra.

So I have few questions. The first is on the current trading. So compared to the implied minus 13% in the midpoint of your guidance how has the years started so far? So what trend do you expect in the first half and in the second one. Then a question on compensation. Does this year full year '25 results include any kind of compensation? So you can quantify? And if you expect some compensation in 2026? Also in this case, if you can tell us if they are included in the guidance and if you can tell us an idea of the potential quantification of those? One last on the guidance. If you can tell more or less, if you expect a similar trend between the two acquisition in more brands to decline in one of chemical.

Alberto, sorry to just -- there was a very huge noise in the background. So it was not really possible to hear, at least from my side, the first question.

Yes. I think that understood. So in terms current trading, I have to say that in the first quarter, we are running consistently with respect to the guidance that we communicated today. So in terms of top line, we are progressing consistently. With respect to the claims, yes, the guidance is including approximately $5 million of claim to be expected to be closed this year with respect to a discussion that we are having with a U.S. OEM in Mexico and the total amount that is part of such a guidance it's $5 million. With respect to the Q-o-Q evolution, I have to say we do expect an acceleration with respect to the top line in the second back-loaded in the second part of the year. And as well, we do expect on a quarterly basis, a progression as well on the margins due to the benefit deriving from the execution of the efficiency programs that we are running both in Mexico and in Italy.

My last one for -- on the industrial versus the business in 2026, if the trend was similar to the group average of our guidance or there is some different trends. Sorry, again...

Yes. So we do expect the Industrial and Infrastructure segment to increase in terms of revenues in 2026 compared to 2025. This is as well driven by -- this is mostly driven, I would say, by the expected volume evolution. And you can imagine the geography, which is expected to grow the most East Asia, both India and China. Whilst on the other side, e-mobility is expected to decrease, especially in a year-on-year basis due to the evolution of our business in USMCA. And I have to say that on the other side, we are progressing with respect to the penetration of the Chinese -- the local Chinese market.

The next question comes from Monica Bosio.

My first question is on a general. So the guidance, do you have factored into the guidance, the current situation? And would you feel safer toward the bottom end of the guidance, maybe because the situation is really difficult to navigate? That's a general question. The second one is on China, which are your active clients -- local active Chinese clients or how many in China, for the e-mobility. And in general, can you give us an indication of the revenues you are targeting to generate in China? The third question is on the start of production. The company had six start of production in 2026 in 2025. How many start of production are you targeting for this year? And then -- sorry, I have a lot of questions. I'm sorry about this. It's on the inventory side, the company did a very good job on the inventory side. But I was just wondering if the company sold out, sold the inventories semi-finished products in 2025? And if it's -- EPS, if do you expect further sell-out inventories also in 2026. I would say that for the time being, it's all from my side.

Okay. So thank you, Monica. With respect to your first question, Yes. No, we are not considering, let's say, the situation to be worse compared to what we have faced so far in 2026. Of course, should you know the situation getting worse, of course, this is not reflected in our guidance. With respect to China, where I'll let Marco to make a broader comment on the evolution on the Chinese market. As you can imagine, we are now focusing all of our efforts with respect to key, what we do consider as the best OEMs to be served in China. So I will avoid to disclose the specific names. But as you can imagine, we are putting all of our efforts with respect to the Chinese OEMs, which are interested in having a global partner as this is a key selling point of our proposition. And as you can imagine, we are engaged with all of them again, considering the top 5 Chinese OEMs.

Yes, I honestly the Chinese OEMs that we are already working with and that we are as well discussing new projects are the key Chinese OEM. So for some of them, we have already businesses that are as well active other businesses that are part of the start production, the total number of start of production. Matteo has the precise number. So I don't want to say something in this direction. But we are progressing, let's say, the penetration in this. As well in the context of their interest in creating as well an international footprint. So they are, for sure, looking to Europe and they are active as well already in Europe in order to set their operation. So I think during the last weeks, we heard as well some increase of market share. They doubled the Chinese OEM, double the market share in Europe. They are as well interested in buying plants that the European OEMs are not considering any more valid. So there is an all complete dynamic that is moving with them in order to create as well for them the support that they need. With reference to China, I would like to add that we are as well working in the direction for increasing our ecosystem that are always in the same direction, tooling R&D and technical activity in China and supply chain that in China is key to secure the competitiveness. So these are the three, let's say, streamline that we are progressing in order to increase our impact in China.

Yes. In terms of in 2026 on a global basis, we do expect 14 new SOPs, of which 10 will be in China. And I have to say the vast majority of them will be towards Chinese OEMs. There was one last question on the inventory. Yes. In 2025, we sold approximately EUR 30 million of inventory that we had in excess at the end of the year. So we saw EUR 30 million without having an impact, a negative impact on the margin. So we're sold at the cost value. Of course, this is diluting the EBITDA margin, and we don't expect any additional to sell additional inventory in 2026. So the guidance is not considering a potential additional sale of inventory in 2026.

If I may follow up on your -- the revenues the company is targeting overall to generate in China. If you can give us a rough indication, it could be very useful. And I have another general question. I apologize, I do not remind if you have excess of capacity in the e-mobility in case, could you use this excess of capacity for production in the industrial?

Yes. So step by step. So in terms of total revenues. What we can say that we do expect to slightly increase our local market share in China, representing approximately 4% of over the total market. We were below 3% market share in 2025, and now we are targeting 2026 to be above the 3%. We should be a proxies where to make your, let's say, computation with respect to the total value that we are targeting in China for the auto business. With respect to the installed capacity, yes. So you are right. I mean all of the presses that we installed for the auto business can be used as well for the Industrial business unit. So it could not be the opposite, but what we have installed originally for the auto could be used as well for the Industrial If needed.. I have to say, in terms of saturation, we are running above 65% in China. In Mexico, now we are above -- we are between 55% and 60%. Whilst in Europe, we are as well between 55% and 60% with respect to the auto business.

The next question comes from Emanuele Negri.

I have a couple. The first one is on your guidance, which in the midpoint targets around 12% year-on-year decline, could you give us a rough breakdown between volumes and price/mix? And the second is if you can give us a strategic update on India, which is your strategy to increase your revenues in India, and which is the next step for penetrate further the Indian market, maybe also in the automotive market.

Yes. So well, in terms of internal volumes, I have to say, we have two different trends between the two business units. So for the auto business in terms of tonnes to be sold in 2026, we do expect a decrease in the range of 10% approximately and the rest will be driven by the price and mix dynamic. Whilst for the industrial business, we do expect an increase in terms of volume in the range of 20%. So again, the guidance, it's a combination of two different behavior expected for the two segments in which we are operating. Ben, what was the second question?

Indian market.

Indian market, I have to say we are progressing consistently with our original plans in the development of the local industrial business through our joint effort with the Kumar family. And I have to say that we are satisfied about the increased market share that we are now reporting in India and as well to the growth of the underlying local Indian market. We are as we're now considering to expand is where the business to be produced in Indian as well abroad. So that's another important part of our Indian initiative. And it's very important to emphasize that through the Kumar -- for the Kumar acquisition, we entered as well the Transformer business. So Transformer business will account approximately EUR 20 million of revenues in 2026. This is as well being fully dedicated nowadays to the local Indian market, but we are as well now making a CapEx to have a new plant dedicated to the transformer business in India that will be as well used to serve overseas customers from India. On the auto business, we are progressing with respect to a potential discussion targeting a new joint venture with a local Indian partner that will be fully dedicated to the Indian market.

Maybe just to say that we consider India a very potential market and in view of the Kumar experience. But in addition, for the opportunities that we see as well in the automotive business. So for us, it's a very strategic market.

The next question comes from Giovanni Selvetti.

I have missed something because I joined late. But just out of curiosity, I was wondering whether the midterm targets are still achievable given today's update, especially in 2026 guidance, but maybe I've missed it, like I said, if you already commented on that. And then if you can please then quantify exactly what is the change of the order book based on the cancellation in North America? And if I heard correctly before, you mentioned about potential EUR 5 million compensation on the back of that?

So let's get started from the midterm. So the midterm guidance will be communicated once the situation will be stabilized. So we are not now in the position to release any update with respect to the midterm guidance due to the current scenario, which is very, very, very volatile. So we do prefer to communicate any update with respect to the midterm guidance in a later stage once we will be as well in the position to do it. On the $5 million, so you understand it's correct. So we said that 2026 guidance is embedding $5 million to be accounted with respect to the discussion that we're having with our customers following the shift, the major shift that we experienced in USMCA due to the evolution of the Trump politics. So that's what we said. And I have to say the order book, it's mostly impacted by the evolution of our business in USMCA. This is a combination of both projects which were canceled especially from certain U.S. OEMs that change the original plans we expect to the adoption of new electrified models to be produced and been sold in the area. But as well to the postponements of other project, which were expected to start in our order book. To say...

Just trying to derive the number here because if I look at your presentation of the 9 months result, the order book was still at EUR 4.2 billion and now is at EUR 2.7 billion. It means EUR 1.5 billion difference, of course, some is executed in Q4. But are we talking about more than EUR 1 billion cancellation in the order book?

No, no, no, no. We are below EUR 1 billion. But as you can imagine, this is order book evolution in U.S. and it accords reporting, let's say, slightly less than 50% of the total order book deviation versus what we communicated at the end of September.

The next question comes from Alberto Gegra.

A couple of follow-ups from my side. The first is on the price effect. Because if I do the math, the average selling price of Motor set is more or less minus 20% compared to 2024. Of course, there is also a mix effect, but if you can help us in identifying the pure price in 2025 and expectation in 2026. Then a follow-up on the previous question. You mentioned a 20% volume growth in industrial, which seems to be quite high. So if you can tell us the drivers and a bit of color probably is on this growth.

Yes. So well, on the price effect, again, this is to be considered like a mix between price and mix because, as you can imagine, are shifting towards works as well, motor cores dedicated to the hybrid application. As you can imagine, the weight, it's lower compared to our motor core dedicated to a full electric model. And therefore, this is a well part of the price and mix effect. So on the Industrial auto business, we do expect the price mix expected to be in the range of 10%, approx so a decrease of 10% between '26 and '25 whilst for the Industrial business, we do expect a lower price effect, which is in the range of minus 5%. There was to industrial -- Yes, well, you want to comment on a broader sense of the industrial market? I have to say we are -- in terms of geographies, in 2026 we are considering growth to be achieved in Asia. As we said, both in China as well to the development of the discussion on the new pipeline of project that we are now in an advanced stage with respect to certain of our key European and major industrial customers. India is expected to keep -- to maintain its expected growth rate in the range of slightly below 10% on a year-over-year basis. But as well to say that we do expect as well increasing volumes and revenues in the U.S. for the industrial business due to ever since as while one of the few positive effects of the Trump policies, which is somehow reactivating as well the local industrial manufacturing. In terms of segments, we do expect that what we call energy and as well Transformer will be the segment reporting the highest growth rate in 2026 compared to 2025.

One very last on my side, to the previous one. So if you can recall what is the split between BEV and the hybrid in sales and in the backlog?

Okay. So yes, I have to say, as you -- so let's go step by step. In the order book, we now have better its accounting proximity of battery electric vehicles, it's in the range of 80%. So 20% is the part for hybrid applications. As you can imagine, we have seen an increased weight for the hybrid application started had to say in the last quarter of 2024, and this has progressed as well in 2025. And what we see as well in North America, it's a switch now from expected BEV programs then to be substituted by hybrid programs starting from the last quarter of 2027 onwards. So now OEMs will be mostly dedicated to the sale of internal combustion engine to take as well time to offer to the market the new projects mostly on the basis of hybrid applications.

As there are no further questions, I will now hand back to the speakers for any final comments before bringing this presentation to a close.

Yes. Thank you very much for all the questions and as well for your attention. 2026 remains a turbulent year. But we are -- we confirm that energy transition electrification is a positive trend, remains a positive trend in all the markets. And through the resiliency of our business model that is covering different segments, market and as well the flexibility that we can secure. We remain, of course, positive as well for the guidance that we have best to you with regards to 2026. Thank you, and we will remain connected when we will have news to be communicated.

Thank you. This presentation will now come to a close.