MUNICH (dpa-AFX) - Knorr-Bremse successfully countered the ongoing headwinds in the commercial vehicle sector at the start of the year, bolstered by cost-cutting measures. Despite a slight dip in revenue, the manufacturer of braking systems for rail and heavy-duty vehicles managed to increase both earnings and profitability. 'We have started with strong tailwinds,' stated CEO Marc Llistosella in a press release on Thursday. The executive reaffirmed the full-year targets, a move rewarded by the market with a rise in the share price.
The stock, listed on the MDax index of mid-cap companies, initially climbed to its highest level since mid-April. Most recently, the shares were trading up 2.2 percent at 105.40 euros. The stock had already seen significant gains in previous days amid a broader market recovery.
The figures were largely in line with expectations, commented Akash Gupta of JPMorgan on the quarterly report. While Knorr-Bremse missed average analyst forecasts for revenue, it compensated with unexpectedly strong margins. These were also better than management had anticipated back in February. Regarding the full-year targets, he viewed this positively, as the group would otherwise have needed to achieve a much larger leap in profitability in the coming quarters. Gupta was also positively surprised by the order intake, despite its decline.
Meanwhile, Vivek Midha of Citigroup praised the increase in free cash flow. Given that the first quarter is typically weak for Knorr-Bremse in this regard, the inflow was particularly encouraging, especially as this marks the second consecutive year of such performance.
'Our company's development is progressing very positively, as planned,' said Llistosella. The rail business remains the company's 'guarantor of stability.' At the same time, the commercial vehicle division is demonstrating 'remarkable cost discipline.'
While revenue declined moderately by one percent, partly due to negative currency effects, Knorr-Bremse significantly improved its operating result thanks to reduced expenses. Earnings before interest and taxes adjusted for special items (adjusted EBIT) rose by nearly 11 percent year-on-year to just under 261 million euros, the Munich-based company announced. The operating margin improved by 1.4 percentage points to 13.5 percent. CFO Frank Weber highlighted that the group achieved its best first-quarter return in five years, despite the still challenging commercial vehicle market.
On the bottom line, the Bavarian company earned 160 million euros, compared to 143 million a year earlier.
Order intake fell in both business divisions at the start of the year, totaling just over 2.2 billion euros, down 6 percent from the previous year's new business. Nevertheless, management still aims to drive revenue up to between 8.0 and 8.3 billion euros by 2026. In 2025, weakness in the commercial vehicle business had caused a slight revenue decline to 7.8 billion euros. The operating margin improved to 13 percent and is expected to rise to around 14 percent in the current year.
