Stabilus SE (SIUAF): Navigating FX Headwinds and Strategic Cost Actions to Secure Long-Term Growth

In the face of a turbulent global economy, Stabilus SE (SIUAF) has emerged as a case study in resilience and financial discipline. The European automotive supplier's third-quarter 2025 results underscored the challenges of a soft market and adverse currency effects, yet management's swift and calculated responses-ranging from aggressive cost-cutting to strategic refinancing-highlight a company determined to fortify its long-term competitiveness. For investors, the question is whether these measures will be enough to stabilize Stabilus's trajectory or if the headwinds will continue to erode its margins.

A Challenging Q3: FX Pressures and Revenue Slump

Stabilus's Q3 2025 performance was a mixed bag. Revenue fell 9.9% year-over-year to €316.0 million, with nearly half of the decline (4.6 percentage points) attributed to unfavorable foreign exchange rates. Adjusted EBIT dipped 23.2% to €33.1 million, translating to a margin of 10.5%, while net profit plummeted to €10.1 million from €24.3 million in the prior-year period. These numbers reflect the dual pressures of a slowing global auto sector and the euro's volatility against the U.S. dollar, a critical currency for Stabilus's North American operations.

Yet, the company's management did not sit idly by. In a move to bolster liquidity, Stabilus secured an amended Facilities Agreement, including an additional €150 million term loan maturing in 2029. This refinancing not only extended the maturity profile of its debt but also provided a buffer against near-term cash flow uncertainties. According to a report by EQS News, the company now expects to maintain a net leverage ratio below 3.0 for the remainder of 2025, with a long-term goal of reducing it to 1.0. Such discipline is critical in a sector where liquidity constraints can quickly amplify operational risks.

Cost-Cutting as a Strategic Lever

While financial engineering is one tool, Stabilus's management has also turned to operational restructuring. The company launched a 2025 transformation program that includes global job cuts and production footprint optimization. Specifically, Stabilus plans to reduce its workforce by approximately 450 positions, primarily in the EMEA and Americas regions. These cuts, while painful, are part of a broader effort to streamline hierarchies, harmonize processes, and reduce overhead.

The upfront costs of this transformation are significant. Stabilus estimates one-time expenses of €18 million in 2025, but the company projects annual savings of €32 million starting in 2028 and €19 million in 2027. This timeline suggests that the benefits of the restructuring will take time to materialize, which could weigh on short-term earnings. However, the revised full-year 2025 guidance-revenue of €1.3 billion and an adjusted EBIT margin of 11%-indicates management's confidence in balancing cost discipline with operational stability.

Liquidity and Leverage: A Path to Recovery?

Stabilus's liquidity position remains a key focus. Preliminary FY2025 figures show an adjusted free cash flow of €119.0 million, a positive sign in a challenging environment. The company's net leverage ratio of 2.97 as of September 30, 2025, is still above its target range but within acceptable limits. Management's commitment to reducing leverage to below 2.0 within two to three years signals a clear prioritization of debt reduction, which could improve credit ratings and lower borrowing costs over time.

However, the path to deleveraging is not without risks. The auto supply chain's exposure to tariffs and customer behavior shifts-highlighted by CEO Dr. Michael Büchsner-adds a layer of uncertainty. For instance, U.S. tariffs on European imports could indirectly pressure Stabilus's North American clients, leading to order delays or renegotiated contracts. While the company's cost actions aim to insulate margins, these external factors remain beyond its control.

The Bottom Line: A Calculated Bet on Resilience

Stabilus's 2025 strategy is a textbook example of defensive management in a downturn. By addressing FX headwinds through refinancing, cutting costs to preserve margins, and targeting long-term leverage goals, the company is positioning itself to weather the current storm. Yet, the success of these measures hinges on execution. The €18 million in restructuring costs and the delayed savings until 2027 mean that investors should brace for a bumpy near-term ride.

For now, Stabilus's revised guidance and liquidity cushions provide a degree of comfort. But the real test will come in 2026 and beyond, when the full impact of its transformation program becomes evident. If management can deliver on its promises-without sacrificing innovation or customer relationships-Stabilus may yet emerge as a leaner, more agile competitor. Until then, the market will be watching closely.