S
Stabilus SE
XMUN:STM
Stabilus SE
XMUN:STM
Price:
17.58
EUR
3.41%
Market Closed
Market Cap:
€434.2m
Add Note
Add Target
Capture your thoughts and set a target
Decide at what price you'd be comfortable buying and we'll help you stay ready.
Based on
Margin of Safety
0%
10%
20%
30%
40%
50%
Your Price Target
Linked to
current price
· In Buy Zone
Loading
Note attached
Choose the stock you wish to monitor with a price target
Popular Picks
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
Bank of America Corp
NYSE:BAC
|
US |
|
Mastercard Inc
NYSE:MA
|
US |
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
Pfizer Inc
NYSE:PFE
|
US |
|
Nike Inc
NYSE:NKE
|
US |
|
Visa Inc
NYSE:V
|
US |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
Coca-Cola Co
NYSE:KO
|
US |
|
Verizon Communications Inc
NYSE:VZ
|
US |
|
Chevron Corp
NYSE:CVX
|
US |
|
Walt Disney Co
NYSE:DIS
|
US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
Ladies and gentlemen, welcome to the Stabilus S.A. Conference Call regarding the Financial Results of the Third Quarter of Fiscal Year 2018. [Operator Instructions]Let me now hand the floor over to Mr. Mark Wilhelms.
Yes, hello from my side, hello from the Stabilus team. You've got here on the line from Stabilus, Dr. Stephan Kessel, the interim CEO; Andreas Schröder, our Investor Relations Manager; and myself, Mark Wilhelms. I'll just hand over to Stephan Kessel for a few introductionary comments.
Yes, ladies and gentlemen, welcome to the conference. I will not to the presentation because -- for 2 reasons. The one is, so far, was in the supervisory board and we talked through such presentations the way you do right now. And secondly, it's not yet my results, it's Dietmar Siemssen's results. And I think you can tell from the presentation, which you already -- I'm sure you had a glimpse of at least, that we came in pretty well. I think about at your expectation, a little bit above our expectation, which is a good situation to be in. Having said that, I would like to hand over to Mark Wilhelms, but I'm available for Q&A later towards the second part of the call. Mark, please go ahead.
Yes, thank you. Now let's turn to Slide #4, the highlights of Q3. Q3 revenue-wise came in 7.2% over last year's number, which delivered -- which took us to EUR 250.2 million, that is EUR 16.7 million more than last year. Within that, Asia/Pacific, Rest of the World, up by astonishing 34.3%. Later on, as we speak about the regions, you'll see some more details to that. Europe, up by 10%. And NAFTA, suffering from the weak dollar, is down by 3.7%. Exchange adjusted, this clearly looks positive, and we'll come to that later on.Talking about the business units, Automotive Powerise, extremely strong with 12.6%. Within that, specifically Asia is helping us a lot. Vibration & Velocity, up by 8% year-on-year. Commercial Furniture, having a strong quarter, up by 6.8%. Automotive Gas Springs, 4.7% in the year-over-year, and Capital Goods at 4.3% year-over-year. All in all, that helped us on the EBITDA side to give us an increase of 11% to almost EUR 40 million, precisely EUR 39.5 million EBIT. In terms of margin, the quarter was a strong one with 15.8% versus last year's 15.2%. So quite clearly, we see our year-over-year improvement that we want to achieve, taking us from last year's average EBIT margin of 15.1% to 15.2% that we're showing in the forecast, being 0.4 points higher, clearly we're delivered in the third quarter.In terms of profit, we came in at 25.3% (sic) [ EUR 25.3 million ] in this quarter, a bit above last year's EUR 24.6 million. Profit margin is 10.1%, slightly below last year's 10.5%.In terms of leverage, we've done another good positive step forward. We are now at 1.2x net leverage ratio versus 1.7x we had a year ago, or 1.5x we had at the end of the last fiscal year, September '17. Net financial debt stands at EUR 226.7 million. And those of you who have looked into the balance sheet will have noticed the strong cash position we currently have.So it's good results of the third quarter, combined with the full year-to-date numbers, give us a lot of comfort in confirming, a, our revenue guidance, which is 8.8% year-over-year organic growth at a constant FX rate of USD 1.10 or EUR 960 million revenue in total. Margin wise, we will come in, or should come in, at 15.5% confirmed. And later on as we go through the numbers, you will see there's a high level of indication that we should come through.Let's turn to Slide #5, that are the graphs to the numbers I've talked about earlier on. The only additional information here is at the bottom right-hand corner, the cash flow. Last year's cash flow at EUR 30.5 million increased significantly by 32.5% to now EUR 40.4 million. Clearly, underlining the good results we are delivering are not just profits in terms of accounting methods, but also cash coming in and being available for further spending within -- further investments within the group.Slide #6 shows our year-to-date position. Revenue wise, we have seen in the first 9 months an increase of 6.2%. FX adjusted, that is 10.4%. So we are still at a double-digit growth rate FX adjusted. Margin wise, we are currently at 15%. Last -- sorry, we are currently at 15.4%. Last year, we were at 15%. Last year's full year results were, as I informed you, 15.1%. So the last quarter gave us an extra average here of 0.1. Applying the same logic to this year's 15.4% underlines that we are close to the guidance of 15.5% EBIT. In terms of profit, we have 9 months on the go, an increase of 5.2%, taking us to EUR 72.6 million. That is, in percent of revenue, 9.9%, very close to last year's result of 10% there.Cash flow, free cash flow to be precise, we are up by 36.7%, taking us to 9.8% of revenue. In euro terms, EUR 71.6 million (sic) [ EUR 71.9 million ]. Clearly, underlining the results are strong and generating the cash we expected to see.Let's flip forward to Slide #8. Slide #8 shows for Q3 the revenue by region and the EBIT by region. The revenue increased by region, I've mentioned before, the 10% plus for Europe. The U.S. or NAFTA in total, down by 3.7%. FX we adjusted, we are at 4.7% positive. So if the dollar would have remained constant, we would've shown a 4.7% growth rate there. Asia/Pacific very strong, up by 34.3%. In terms of margins -- or in terms of EBIT numbers and being an indication for the margins, we see that Europe is, in terms of profit, a little bit lower at a growth rate of 4.3%. And the revenue growth rate is -- in the U.S., the profit growth rate is better than the revenue, therefore, we will have a margin increase. And again, Asia stands out with a very strong profit increase of 126.9%.Flipping over to Slide #9 in terms of year-to-date, 9 months year-to-date. Overall, revenue growth, 6.2%. Within the region, Europe being a strong base number of EUR 376.9 million, showing a 9.1% increase, so above average. NAFTA, not unexpectedly suffering from the softer dollar, still showing FX adjusted 8.7% growth rate. And Asia/Pacific, showing 22.2% growth rate.On the right-hand side, we show the EBIT numbers. EBIT in total is up by 9%, taking us over the first 9 months of the year to EUR 112.7 million. Within that, growth rate in Europe was very nice with 16%, delivering an EBIT of EUR 58.1 million. NAFTA, suffering from the softer dollar and some operational, call it, hiccups, issues we've talked about in the Q2 call at an 8% in brackets, taking us to EUR 39.2 million. And Asia/Pacific showing 42.6% growth, clearly well ahead of the revenue growth we have seen with 22.2%. So there, we will see later on some nice margin improvement.Now speaking about the regions, we are starting with Europe on Slide #10. As mentioned, revenue up by 10%. European car production -- I'm talking now to the key highlights on the right-hand side. European car production at 6 million units. That is around 4.7% more than last year. Our 10% underpins -- confirms that we are growing ahead of the European car production.The increase in Europe was primarily driven by Capital Goods and the automotive business units. Capital Goods grew by 13%, Powerise revenue increased by 11.9% and Gas Spring revenue being very close to the overall car industry by 7.9%. With that 7.9%, you again see that our market share, that's a take rate of our Gas Springs in the European cars, in the European car industry, is going up.In terms of margin, we are at now 15% versus 15.8% we had last year. What is special in that quarter, as you know, we intensified our M&A activities. And in the last quarters, we had been looking at companies here in Europe and one fairly sizable deal. We incurred a number of advisory expense, which we've written off as we didn't progress that specific M&A project that costed the bottom line about EUR 1 million kind of one-off. On the other hand, as we are continuing in our M&A efforts, we are not adjusting those costs out.Turning over to Slide #11, where I'm showing the NAFTA numbers. NAFTA, as mentioned already, down FX adjusted at 4.7% plus. NAFTA car production, you see that on the right-hand side, is at 4.7 -- 4.4 million units. That is 1.7% down versus last year Q3, with our revenue being up in constant U.S. dollar rates of 4.7%. Similar to Europe, we underline that we are gaining market share throughout our various product segment. NAFTA development was strongly driven by the Industrial business units, specifically Vibration & Velocity showing a 9.6% increase at incurred rates or 19.1% at constant U.S. dollar. Commercial Furniture, albeit on a small base, up by 27.3% FX adjusted. Capital Goods, down by 16.3% at incurred rates or 9.1%. They are suffering from our damper business in the U.S. having a lot of project-specific work, and certain projects are not going ahead in the -- or have not been going ahead in Q3, but should rather be with us in the next about 6 months. Automotive revenue FX-adjusted plus 5.9%, clearly above the car production growth rate of a negative 1.7%.Now turning to Asia/Pacific on Slide #12, where we achieved 34.3% revenue increase. And margin wise, taking us from last year's 10.7% up to 18.2%. Asia/Pacific Rest of World car production in Q3 was at 13.6 million units, that is 5.7% higher than last year. We've seen that China, plus 8.5%; Japan/Korea, slightly negative, with 0.6% minus; South America, that roller coaster in Brazil, up 7.8%. Our revenue increased, as mentioned, by 34.3%. This increase was strongly, strongly driven by our Powerise increase in China from our plant in China. Last year, we had EUR 0.9 million revenue, this year, EUR 7.1 million. Now our plant is delivering at full speed, at full capacity, churning out as many Powerise as we can with the current capacity shipments to Volkswagen, GM and Chrysler. In terms of vehicle platforms worthwhile to mention that the Atlas/Teramont and the Buick Envision. However, we have to keep in mind that some of the GM products are in fact a transfer from Mexico.In terms of margins last year, the Q3 was a bit soft with 10.7%. This year, our Asia region is back to the old habit of being stronger than the average group number. Here, they are at 18.2%.Now going forward, to the market view on Page 14, first thing we should look at, at the bottom of the slide, the industrial share in Q3 was at 36%, same number we had last year. As we then go to the top section of the slide, we see from the 7.2% increase at incurred rates, 8.1% stems from the Automotive business that, FX adjusted, grew by 11.8%. And the Industrial business grew at 5.5% incurred rates, taking us to EUR 89.5 million. At FX adjusted, 8.1%. We here see a thing we strategically need to keep in mind. Automotive business with a strong Powerise has continued and will continue to grow higher than the average group, grow stronger than the average group. That is why in M&A, we need to focus on rather Industrial business and Automotive business in order to maintain our split between Industrial and Automotive business.Slide #15 shows us same information on the 9-month view. First 9 months of the year, up by 6.2%. In terms of market individually, the Automotive business is up by 4.8%; or FX adjusted, 9.4%. And the Industrial business in total up at 12.2%; or incurred rates, 8.6%. So on a year-to-date basis, we are doing pretty well in working hard to keep the balance of a strong industrial share. Year-to-date, we are at 37% versus last year's 36% share of Industrial business within Stabilus. So strong growth came, in percentage terms, from Vibration & Velocity. On the other hand, Cap Goods, sitting on a higher base, clearly has a stronger closer effect.Slide #16 shows us the details for the Automotive business, overall up by 8.1%. Dark blue is the color for our Gas Spring business, they are up by 4.7% to EUR 89.1 million, within that is a EUR 2.4 million negative from the U.S. dollar FX effect. And the Powerise business is up by 12.6% or EUR 8 million to EUR 71.6 million. Within that, EUR 3.1 million negative FX. Within the U.S., the Powerise revenue are stronger in fact than the Gas Spring revenue. Overall car production in Q3 was at EUR 24 million (sic) [ 24 million units ]. That is a plus of 4% versus last year. And our growth rates, as I've mentioned already before, are stronger there. Automotive revenue, up plus 8.1%. That said, Automotive Gas Spring revenue incurred rates up 4.7%, or 7.5% at constant FX rates. Powerise, with a strong impact from China, sitting at 17.5% FX-adjusted growth rates.The trend from the consumer side towards SUVs, crossovers, MPVs, hatchbacks still -- is still intact and that supports our overall automotive revenue development. And again, I invite all of you to take a look at the cars you see in the car parks, et cetera. You will all notice that SUVs are the cars the consumers want to have. Whether they are full 4 by 4 is different discussion for us. Important is the body style with a more boxy shape because that necessitates gas springs or Powerise to help the driver of the car -- to help the operator of the car in opening the tail gate. Turning over to Slide #17, we are talking about the Industrial business. We've seen that Capital Goods, as I mentioned, with a strong base of EUR 56 million. They have shown a 4.3% increase year-over-year. Vibration & Velocity Control, 3 of the 4 companies that we acquired from SKF in 2016 are in that group. The fourth one is part of our Capital Goods business. They are up by 8% and Swivel Chair is up by 6.8%.With that overall increase of 5.5%, which is 8.1% excluding FX effects, we are nicely positioned for the time to come to show good growth rates here. And overall, agriculture construction machinery, bus/truck/transportation are doing well. And also, the independent aftermarket is developing strongly for us. We've won a couple of accounts. We've intensified our own efforts there in getting our products out to the market that is showing good results in the revenue. But it should also show good results in the time to come, ensuring that our overall strategy of a 6% plus growth rate over the next year remains intact.Let's now turn to the outlook on Slide #19, there is no new information. We are reiterating what we've said before. EUR 960 million at an average FX rate of $1.20. That is 5.5% year-over-year increase; or at constant FX rates of last year's $1.1 to euro, which should show an 8.8% growth rate. Margin, 15.5%. Beforehand, I gave you some information why we feel very comfortable that we will achieve that 15.5%.This now concludes my part of the call, and we open the floor for questions.
[Operator Instructions] And the first questioner is Florian Treisch from MainFirst.
Actually, I have 2. The first one is on your strong growth in Powerise in China. Are you planning to accelerate any investments into a new line or new plant based on current demand? Or is the current demand in line with the expectation, hence you don't have to change your CapEx number? And please, can you remind me on what is the maximum up total of the Chinese Powerise plant at the moment? The second one, Mr. Wilhelms, you mentioned a failed M&A transaction in the last quarter, calling it a decent size deal. It looks like a bit of an important deal. So can you clearly rule out here any relation to the surprising departure of Mr. Siemssen based on the failed M&A? As a follow-up to -- it's a pleasure to have, Mr. or Dr. Kessel, on board as well. Can you, Dr. Kesses, please provide us some details on your view on M&A strategic direction of Stabilus, et cetera, as you've also been a supervisory board member for several years now?
Yes, let me take over the Powerise China question. The [ Changzhou ], yes, assembly line we have churns out around 400,000 parts in a normal shift pattern. If and when required, the team can go to Saturday, Sunday work for the Powerise. Or we can, with smaller investments, break certain bottlenecks so we can deliver 0.5 million Powerise out of one assembly line. Within China, we are essentially at maximum capacity right now in the set up. So of course, we want to, yes, take advantage of the current demand. And we have in our capacity plan to install a second line in the very near future in China in order to increase shipments from Powerise in China. The limitation is, a, the machine; but b, the size of the building and the access to the work house. As I said, we will install a second assembly machine, assembly line, that are in effect more than just one machine, to double our capacity soon physically that fits very, very well in the building. The building is large enough to house up to 3 of those machines with all the parts, with all the space we need to deliver. We are recognized as a good employer in the region where our plant is, so getting access to the right level of workers shouldn't be a problem. Now part 2 of your question, failed M&A, Dr. Kessel will speak to that. I would not call that failed. Failed means -- indicates that something went wrong. But this year was to, in my view, kind of prices getting very high, and one needs to be careful in calling it a failure if one is not paying all overheated prices at the last minute of a bubble. But clearly, that's very much subjective use of various people. I'll now hand over to Dr. Kessel to give you his view on M&A.
Yes, maybe -- thank you. Maybe it was a failure for the buyer, but that's -- will turn out, I think. Yes, we looked at a substantial transaction, which would have maybe even or likely even had required capital increase for the company, so we had very good reasons to be prudent and take a reasonable risk there. At the end of the day, we don't know the price which was eventually paid. But we listened to the banks selling the company and they talked 15x -- more than 15x EBITDA multiple, which would have been dilutive by any means in our situation. Or you could have made it accretive by assuming you have EUR 20-plus million synergies. But the company had a sales ticket of EUR 140 million and nobody here in the Stabilus board, be it advisers, be it supervisory board was convinced that by any means we could make this a profitable and accretive transaction. So we waived it. And to that end, I agree to Mark Wilhelms, that's not a loss, that's a very rational decision because we don't want to do something which is -- turns out to be silly. Though it would have been a very nice add-on. So we were happy to pay like a multiple, say, on our level and we looked into that very, very intensely. And by the way, we keep looking there. So from the Supervisory Board, we appreciated a lot that we installed the M&A department here with [indiscernible]. He is looking after like a good handful of transactions, some of which are smaller, some of which a little larger. Not as large as the one I just described to you. And we -- needless to say, we, I suppose, like the management board and the supervisory board, because that's the underlying question you asked, are very supportive of that process. And there's a certain likelihood that within an overseeable time, we will do like a few next steps, nothing like major, but very -- let's say, very intelligent add-ons to the Stabilus group. I think that answers the other question which you had, is there a connection between Dietmar Siemssen's leave of the company and as you call it, failed M&A, which I try to convince you wasn't failed. No, it's a coincidence. He left since he wanted to leave. That's about -- all I know. When he started talking to us, we had already stopped any activity on the acquisition. He has been in the company for 7 years. He has been very successful from my perspective. The supervisory board was surprised by his move. More than a week, we tried to talk him into reconsidering his decision, but he didn't. And then we talked about how and which way we manage the transition, and we came to the conclusion, you know by now, he left by the end of last month. And I took over simultaneously. And we now have launched a search from the supervisory board for a new CEO for the company, which is, again, very likely to come from outside Stabilus, not from inside. I hope that answers your question. I'm happy to go deeper if you...
Absolutely. And yes, sorry for calling it a failed deal. Actually, I must say, I really appreciate that you remained price sensitive here. It is certainly something the investors are very happy about it. Stabilus never is, whatever, coming into a phase of overspending, really having a conservative approach here. So thank you very much for that.
Yes, to be very clear on that, I stated this elsewhere, so say, if we had like the super-duper Asian company, I would pay a top ticket price because that's a strategic enhancement. I would dare to go back to you and say, "Hey, your numbers, this is for like the next 2 or 3 years, not accretive." But isn't that a strategic reason why we want to do that, and I think you would find -- you would understand that. But to do something more in Europe and then be dilutive was not something which we considered smart. And I appreciate you share that view.
And the next question comes from Manuel Tanzer from equinet Bank.
I have 2 questions. The first one is on Capital Goods growth in NAFTA, it was down roughly 9% even when adjusting for FX. So can you shed some more light on the weakness there and what we can expect for Q4? And the second question, looking at your free cash flow, you're on a good track now to beat consensus estimates of EUR 85 million roughly for the full year. Assuming that this cash flow level is sustainable, just wondering what you plan on doing with it. I mean, obviously aside from M&A. And wouldn't a share buyback program be attractive at the current level? That would be my 2 questions.
Yes, Cap Goods in NAFTA, they have a lot of project-related work specifically in the solar business. And there's always a bit of push from 1 quarter to the other. We try to shift the products to our customers so that our own plant is nicely evenly loaded. But here and there those desires of ours do not follow fruitful ground with the customer, i.e. when those guys, as an example, are doing a larger project for a solar park and they still don't have all the permissions there or the full project scaled up, they're not that easy in taking shipments in line with the old plan, but they rather want to adjust their material inflow to their latest own forecast, and that is causing some hiccups from quarter-to-quarter. We expect specifically that project-related business over a 6-, 9-month period to be stable in line with the expectations we have voiced to you in the past. So it will come back. Whether it now comes back until the end of September, I'm not that sure. But that will not change our overall revenue guidance. Because there's a lot of industrial projects we have lead times of like 4 months. If one customer is not ordering, we can -- we've seen the technical capabilities shift over and then shift to other projects. The second question related to the free cash flow. Yes, the free cash flow is strong. We are proud of that. And as in the past, I would like to, yes, reiterate to people take a look at the DSO, take a look at the DPO. We are not achieving that by paying suppliers late. We are not achieving that by ensuring that customers pay us early. It's a very natural strong cash flow we are having. Buyback, share buyback, it is as far as I'm concerned, not in the planning. For us, our issue overall is more limited liquidity of the stock. And with the share buyback, I would -- makes it even worse. Therefore, I don't think it's the right thing to do. The other question, what to do with money quickly comes, why don't you repay loans, we are currently paying less than 1% interest. Therefore, there is really no advantage in repaying a loan and a year later for an M&A reinstating the loan and paying again certain fees to the banks. That is why we'd rather keep those funds on a bank account here and being ready to foot and fire if an M&A transaction hits us. In terms of M&A, cash flow wise, cash position. With well over EUR 100 million cash on our balance sheet, we've got that point in terms of cash. We've got a EUR 70 million uncommitted M&A credit line and we've got a EUR 70 million essentially unused revolving credit line. So in total, we have now firing power in terms of established credit lines or cash of a good EUR 200 million available for M&A, and the rest we need to keep the daily business going. That clearly shows you that we can act if something comes along that is the right deal to do. Without renegotiating bank lines, without doing a capital increase.
Okay. It obviously makes sense not to buy back share due to liquidity restrictions. But what about like a perspective increase in dividends then?
That could happen. But that's something we need to discuss once we have the full year results on our table together with the supervisory board. The first dividend we paid was EUR 0.50. This year, in February, we paid EUR 0.80. In a perfect world, one would go for year-over-year increases in the dividend payout. But this is now too early to talk about it because if you would do an M&A, it would be nonsense to borrow money for M&A and then pay a higher dividend or something.
Yes, obviously. Yes.
We need time. So let's wait until the full year results are there. Now with the strong cash flow, one can quite clearly see reasons to increase the dividend payout. But as I mentioned, this is simply too early and we need to look at the full view of what has happened over a 12-month period and what are our expectations for the time to come.
Next up is Sascha Gommel from Crédit Suisse.
Three questions. The first one would also be on, let's call it, CEO situation. So if you can confirm that I understood it correctly that you're actually looking for a replacement of Mr. Siemssen that focuses on a similar strategy, i.e. very much focused on top line growth while keeping the margin at a high level. I think that's very crucial for the investment case. So please can you confirm that the top line growth story that has been core to Stabilus over the last years remains in focus? My second question would be on the organic growth rates in Gas Springs, Automotive Gas Springs. In particular, we saw very strong acceleration in third quarter. It looks that it's many driven by Europe. I was wondering if there's special contracts or anything behind that where you can give more color on it. And then my last question would actually be on your revenue mix, which sequentially actually deteriorated, i.e., more Automotive and less Industrial. Still, you increased your margin compared to the third quarter -- second quarter slightly. So I was wondering is that really driven by costs? Is it pricing for your products that is very strong? Or is it product mix? Maybe you can give some more detail around that.
For question 1, I guess Stephan Kessel will take.
Yes, I am happy to do that. No clearly, the fortunate situation -- so sometimes when CEOs leave, you have like a very disruptive situation. But this is not the case here. So we have and it has been communicated, we call this the STAR process, the STAR '25 or 2025, which is heading towards significant growth in the company, excluding any activities on the M&A side. That is a very detailed broken down strategy. It's not just like top-down headlines, it's really bottom-up build and you find it back. And I'm doing this now to get a deeper understanding of the individual plans, talking to the business units managers. And I see this is -- this clearly has substance. And just to have another eyewitness, you know that we hired Markus Schädlich for the region in Asia. And his first feedback is I've never seen a company -- and he has worked as a consultant with many companies, his first feedback was I've never seen the company where the strategy is that deeply broken down to the operational level into all sites, into all factories and all situations of the group. So that's a very, very fortunate situation, and that will mean that even in a do-nothing scenario, if I would totally lazy or the next CEO would be lazy, you'll still have this go strategy going. Or with other words, yes, we support -- we speak, supervisory board, support that strategy, management does it anyway and the employees and the management of Stabilus do it, and the next CEO will have to. So we will look for a character that fits into this type of process and he has to deliver like the same methodology in order to pick up on the strategy process. So a very clear confirmation. There is no change in strategy or any direction of the group. If I jump on the -- what was it, the Gas Spring business, [ Tom ]? There's some effect that -- one big effect like some several years ago, all the OEMs took away the Gas Springs from the engine hoods, from the engine lid and they replaced it by a very simple steel bar. And in the course of more luxury in the cars, this trend is coming back. So partly, what you see in Europe is that. So there is like clear higher installation rates. And still -- in Europe, that's still possible. And we will see this in the next quarters also in the United States. So our -- Gas Springs still have go-through installation rates and this overall trend into SUVs supports that as well. Because it's not just the hatchback, it's something like this second seater which needs support of Gas Springs and so on and so forth. So this type of vehicles need more gas springs, which means installation rates go higher. It's not necessarily correlating to the numbers of cars built. And it's a very fortunate trend for us right now. And the other one is more one for Mark Wilhelms because it has more detailed numbers.
Revenue mix, and which you indicated -- said was slightly reduced Industrial business, you would expect to see a margin deterioration rather than a gross profit movement. Now in this quarter, the industrial share was at prior year's level. So that is one thing. The other thing is as we lowered the plans better, quite clearly the margin improved here and there. Specifically in China, we've seen it. Last year, Q3 was burdened with certain extra costs we had incurred there, getting the team ready, an underutilized plant, et cetera. And now with the Powerise plant in China being then full, like in Europe, like in Mexico, became quite clearly load the plants more efficiently. And therefore, enjoyed a nice drop-through effect of any incremental business.
Nonetheless, I'm grateful for this particular question because this could've been one of our customers asking us the same question and that, that is going to happen.
I have actually 2 follow-up questions. The first one would be on -- so on the European or the Gas Spring business in general for Automotive, those are new contracts ramping up now with new car models that instead of the metal part have a gas spring now, is that a correct understanding? So it's not a one-off in the third quarter, it's kind of in a sustainable ramp-up now, that you see more contracts for this particular product ramping up in the coming quarters.
It -- like I said, it is a trend but it's not like a super trend. You always have like -- especially in Europe, you have like a bit of a rough time for the OEM manufacturers. The new emission regulation leads to a shifting of models from left to right, and we see that. So it could very well be they haven't analyzed this detail either, we had a one-off effect in that quarter. But generally, there is still a gross trend for Gas Springs, that's clear.
Okay, I see. And then...
Well, just one thing. Stressing that -- keep in mind that average Automotive Gas Spring is EUR 253 a piece. A standard car is probably produced at like 400,000 units. So it's -- to see a significant impact on the overall bottom line number, it's not enough to have just one car. It's a trend on a number of cars, on the number of vehicle platforms that is helping us, that is pushing the needle in our direction.
Yes, but a slow move.
It's a slow move, it won't happen overnight. Even if one car line is changed over, we've got gazillion of car lines in Europe that all change 1 every 6 or 8 years. And therefore, takes a bit of time to grow into the business, but it will be a strong and positive one. That is really the key point here. And it's impacted in the year-over-year by what was built a year ago, what is built now, what is the consumer buying. And so the current hiccup in the auto industry do not make forecasting easier, they in fact make it far more difficult.
Okay. And then my very last question, you manage your very strong top line growth, which is among the highest in the industry, with a very low CapEx spending so far this year. Can you sustain that rather low level? Because it is very efficient use of capital if you can sustain that kind of spending level and still grow around 10%.
I mean, this year's CapEx is, in terms of cash-out, lower than we wanted it to be. Here and there, we will not...
But does it catch-up in Q4? Some...
There will -- no, a bit in Q4, but some will simply spill over to 2019. And we have always said that we are looking for EUR 50 million, EUR 55 million cash-out for CapEx. The cash-out was lower because some of our business partners didn't get the machines in time to us. And therefore, we haven't paid them. That will not significantly change in the next 6 or 8 weeks. That is why expect spillover to next year, which will happen. Generically, one trend in this side...
Or we shouldn't be worried about bottlenecks.
We should be at EUR 55 million if everybody would shift quickly. But that is not the case. Therefore, there is more of a spillover. In the year-over-year analysis of cash flow, just keep in mind there's probably EUR 10 million, EUR 15 million CapEx underspending this year, which will spill over into the next year.
But there will be no bottlenecks. So as you may know, I'm with the company for 10 years in the support position. And during the private equity time, you naturally have this tendency to invest as late as even possible. Maybe sometimes a little too late. Sometimes we incurred costs doing over time or doing special shifts because the capacity wasn't there. Once we were public, we changed that policy in order to avoid such bottlenecks and not being able to go because sometimes that curtailed. And we -- the policy is now that whenever we see in the plan a bottleneck, and we plan better than those days, we start investing. So like the last 2, 3 years, you have seen maybe some pull-ahead investment, which debottlenecked the company here and there. So that this reduction, which we have now due to our suppliers, largely will not create bottlenecks. I think we are very well invested, very much in line and we have already launched further investments, for example, for Romania and also for China in order to keep going and maintain the goal. But we are not under pressure to do that this quickly anymore because it's a much better plan process than it has been some years ago.
Now we come to the next questioner, it is from Philippe Lorrain from Berenberg.
Philippe Lorrain from Berenberg. A couple of questions left from my side. The first one would be on any effect that you feel from rising raw material prices and perhaps shortage of components, parts of even raw mats in the markets this year? Looking at your margin, it doesn't look like it's been a big issue for you, but I was expecting you to actually give us a bit more insight on whatever you've observed. And how you fight against basically these kind of issues? And the second question is for later.
Yes, raw material prices have been an issue throughout the industry. And quite clearly, everybody is somehow, somewhat impacted by that. As stated in the past, we have a very strong commitment to buy in the region for the region to produce in the region for the region. So a lot of, yes, things are limited to a specific region. And there -- let me just pull out the U.S. NAFTA. In essence, we buy locally certain parts, for price reasons may still come from Europe, but that is only a low fare. But what we see is that the U.S. steel suppliers are increasing their prices based on the statement that everybody who is buying from Europe or China is paying the 20% input tariff, and they consequently then raise their prices to maintain their price position relative to their competition the way they see their competition. And that has some knock-on effect to us. And it's specifically in the area of the tubes. Interesting is we see that just in the U.S. plant because our Mexican plant that doesn't pay the duty, because Mexico does not levy duty for imports from somewhere, is not suffering from that. And all gas springs we ship from Mexico to the U.S. are currently not subject to that 20% yield duty the U.S. is levying. As such, we feel the impact on the U.S. plant and that's in the area of EUR 1 million, EUR 1.5 million per year for the tubes. And throughout other components worthwhile to mention is a shortage on a specific plastic resin currently that the suppliers use to -- that logic they use to bump up their prices a bit. But we use that resin on a very limited basis for the ball starts, for the old stuff that are mounted at the ends of each gas spring. So in total, it's not leaving a huge mark on us. Having said that, we need to watch stability of the supply chain, our ability to pass price increases onto customers if we want to, and we need to ensure that we remain a desired partner for our suppliers in order to get decent prices and kind service from those partners.
Generally speaking, it's also important to understand that we hardly buy raw material. So we buy -- of course, we buy steel, but there's a lot of value add already in it. So that like the steel sort of material price increases, drops only to a very limited amount in our situation. Same is true for all kind of plastics. There's processed and formed and molded material, and so there's little effect.
We have shown that years ago in the prospectus. It still goes up by 10%, our tubes should go up by like 1.5%. So there's a knock-on effect, but a very limited one.
Okay. And the second question is basically on the organic growth. I mean, after 3 quarters, you stand at a bit more than 10% growth. Just wanted to know what you basically reflect in your guidance of 8.8% organic growth with regard to Q4. It's just that you're a bit more conservative because you expect some production cuts actually in Europe as a consequence of these new emission standards. So is it basically kind of the typical conservatism that you have towards guiding for organic growth? Or is there anything else that we should probably pencil into our models?
No, it's like a bottom-up forecast, and you have reasonably good visibility in automotive industry, less in the other industrials. But we are confident that the numbers we focus now are the ones we will see at the end. And as usual, we prefer to be EUR 5 million above that rather than being EUR 5 million below that.
Okay. Great. And just a last follow-on is basically to the -- to Sascha's question with regard to the gas springs. And I noticed that you are mentioning gas springs going into the engine lid basically. Did I understand that correctly that you said that if we look back like probably 10, 15 years, there were gas springs there which were replaced for cost reasons by the OEMs by steel bars and then that we have a trend going back to the use of gas springs there? Is that correct?
Yes, it's not a black and white picture, but it's about right what you said. So there has been cost-saving measures in like smaller cars and they stay with these bars, and only in like luxury versions that might have like gas springs. The trend is more due to the SUVs. So SUV, and in the U.S. it's the pickup trucks, these engine compartments are huge, so the lids are heavy. On top, you have now this -- in Europe, you have this pedestrian protection. So they have like certain shapes that makes them just larger and the SUVs have larger ones, and that by necessity require -- almost by necessity requires gas springs. So overall, there is like a slight trend back to Gas Springs in the -- for the front lid or for the engine compartment. But bear in mind what Mark Wilhelms said earlier on, this is like piece by piece and it's maybe a EUR 3 or $3 a car when it's introduced, yes? But it is an effect we will see, and that's one argument which have brought up in order to support the argument that the gas spring is benefiting more from installation rate or penetration rate, as we call it, rather than car volumes or cars produced as numbers of cars.
And the next questioner is [ Guan Feng ] from [ Nanchang Insurance ].
Actually, my question was already asked and answered. But just a quick extension on that is the CapEx in China, how long would it take for that to come online?
We do them in steps. As I said, what -- once the Powerise line is fully utilized, say, at 400,000 units, we are breaking specific bottlenecks by installing additional work set. They are taking like 2, 3 months in terms of delivery time. The full Powerise assembly line, to set it up, takes about a year. Now it's not that we have only ordered the machine now. So it's not 12 months away, it's far less than 12 months away in order for that capacity increase for Powerise in China to help, to help us churning out more parts.
And the next questioner is Robin Maxwell from Baader Bank.
Just a couple more. Can we just have a little look at this 18.2% adjusted EBIT margin in Asia in the quarter? I want to better understand, I suppose, how sustainable that's going to be and whether that simply comes from the uptick in Powerise production and sell-through, or whether there's anything else contributing to that in terms of mix?
Yes. I mean, last year's margin, when you go back in the papers from last year, was low because we had a lot of upfront investment in headcount, in qualification of people that are manning the lines, training those guys, launch costs, et cetera. And those costs are now behind us. The plant runs at full throttle. So the rental costs we allocate to each Powerise is, as an example, reducing simply because we are producing more and more Powerise. Therefore, it's very sustainable. When you look back like 2 years, China, Asia/Pacific overall was a notch better than the average group number. And this year, it's sustainable as it is, as the volumes hold up to that, as the plant continues to remain nicely filled. But at the same time, we will quite clearly now get ready to train the crew for the second Powerise line. We will, over time, get ready to train the crews for expansions in gas business, gas spring business we are doing, there will be the launch costs left or right. But overall, one can very well assume that Asia/Pacific, China specifically, will be a notch over the group average going forward.
Okay. Just there is no Vibration & Velocity revenues over there at all, is there for the moment?
A little bit right now. It's a small business with a handful of people we took over from SKF there. That business is fully integrated in our plant. They are working with our SAP system. They are part of our normal plant organization. So it's no longer stand-alone as it used to be, but the business in itself is, as you mentioned and as you see in the revenue numbers, small. Nevertheless, we strategically see a lot of good things that can happen to the Vibration & Velocity business in Asia/Pacific, China. And it's a focus we are putting to Asia/Pacific that will clearly happen over time. And a lot of that groundwork has been laid in the last 36 months, 24, 48 months, however you want to phrase it.
Okay. And Mark, you said as part of the presentation when you talked about Industrial versus Automotive, you were suggesting that Automotive is going to grow as a percentage. Is that because you've recently won a lot of new business, which is not yet been particularly well discussed on the Powerise side -- and/or you're taking market share from the other competitors?
So overall, the market is simply continuing to grow. You see more and more cars also in the C segments that are fitted with Powerise, where the consumer is ordering Powerise or products from our competition. I mean, the key is really the SUVs, the crossovers, the hatchback designs, they're all positive for our products. They're positive for some form of automation of tailgates, and that is where we benefit from. The take rates car by car are going up year-over-year, and that is helping us. And that is why we know there'll simply be more of our products out in the road in the year to come than there were this year or last year.
Okay. Got you. Just one last question. You were asked by one of the previous guys about the emissions specification bottlenecks in Europe. Do you -- I understand you don't really see a production risk, and I'm particularly thinking just in the basic gas springs business in the fourth calendar quarter of this year.
Not as severe as -- what you see is like shift from model to model. So the ones that are approved will be produced, and the other ones will be delayed. But since we have the fortunate situation that we are more or less niche car, it hardly matters for Stabilus whichever car they do. Apart from if they were to take out all the SUVs, sure, we would suffer. But it doesn't appear like that. So it has more like impact in terms of factoring scheduling here rather than total volumes. That's the way we see it. As far as we read the forecast right now and like 3 months in, I would say they are clearly safe, the OEMs can't react any faster.
And the next question comes from Akshat Kacker from JPMorgan.
Just wanted to clarify, maybe I missed this on the call. Can you share the size of the advisory expense within Northern Europe in the third quarter? That's the only question that I was left with.
It's about EUR 1 million.
Yes.
At the moment, there seem to be no further questions. [Operator Instructions] Gentlemen, there are no further questions.
Yes. Then thank you for participating in our Q3 call. And I hope to see all of you joining us for the full year numbers, which we will issue in November with the first set of prelims with the normal caveats that go along with the preliminary number. Thank you and goodbye.
Thank you. Bye-bye.
The conference is no longer being recorded.