HELLA GmbH & Co. KGaA (ETR:HLE) reported organic sales growth for the first nine months of fiscal 2026 despite a declining global vehicle-production market, with its Electronics and Lifecycle Solutions businesses offsetting weaker Lighting revenue.
Chief Executive Officer Peter Laier said sales rose 1% year over year at constant exchange rates to €5.925 billion in the nine-month period. Reported sales were broadly flat at €5.883 billion.
“We continuously outperform the market,” Laier said, pointing to sales growth in a declining automotive-production environment and continued execution of the company’s IGNITE strategy.
Electronics Growth Offsets Lighting Decline
Electronics sales increased 6.8% to €2.543 billion, driven by radar technology and energy-management products. Chief Financial Officer Philippe Vienney said the main contributors included low-voltage DC/DC converters, intelligent battery sensors and body electronics.
Operating income in Electronics rose 5% to €205 million, while its operating-income margin remained stable at 7.6%. Vienney said product mix and material costs limited the margin benefit of higher sales, although lower external R&D services, structural measures and reduced administrative costs helped counter the pressure.
Lighting sales fell 5.7% to €2.535 billion, reflecting the phase-out of programs and lower customer call-offs. The business recorded operating income of negative €2 million, representing a negative 0.1% margin, as lower volumes, complex product launches and inflation in materials including plastics weighed on profitability.
HELLA is accelerating its Lighting Transformation Program and reducing external R&D spending and headcount in the segment. Vienney said the company continues to target a Lighting margin of around 3% by 2028, comparable with the level achieved in 2025.
Lifecycle Solutions revenue rose 4.8% to €763 million. Growth was supported by Special OE operations serving commercial vehicles and off-highway markets, as well as aftermarket activity. The segment’s operating-income margin improved to 11.5% from 10% a year earlier, aided by higher volume and favorable product mix.
Profitability and Cash Flow
HELLA reported earnings before interest and tax of €236 million, up 13% year over year, while net income rose nearly 23% to €133 million. The EBIT increase was primarily driven by a reduction in restructuring expenses to about €35 million from €111 million in the prior-year period, according to Vienney.
The group’s nine-month operating-income margin was 5%. Laier said margins were affected by adverse volume and customer-mix effects, ongoing cost inflation for printed circuit boards and semiconductors, and costs associated with complex Lighting launches.
Net cash flow was negative €99 million, compared with positive €68 million in the prior-year nine-month period. The net-cash-flow-to-sales ratio was negative 1.7%, versus positive 1.2% a year earlier.
Vienney attributed the cash outflow to higher inventory levels, lower contribution from factoring of receivables and greater restructuring-related cash payments. Inventory was increased to safeguard production and launches, he said. Capital expenditure declined to 4% of sales under the company’s CAPEX governance measures.
Management expects cash flow to improve in the fourth quarter through lower inventories, sales-reimbursement collections from customers, lower restructuring cash outflows and higher EBITDA.
Order Intake Supports Diversification Strategy
Laier said 66% of nine-month order intake came from Asia-Pacific and North and South America, meaning two-thirds of new business originated outside Europe. In addition, 24% of orders came from Chinese automakers or OEMs in Japan, India, Korea and ASEAN markets.
Electronics accounted for 58% of total order intake. Recent awards included a mid-three-digit-million-euro order for integrated EnergyCore solutions from two international OEMs in the Americas and Europe, with production starts scheduled for 2027 and 2028. HELLA also secured two series orders from Chinese OEMs for its latest-generation 77GHz radar systems, with production beginning next year.
The company also cited Lighting orders for U.S. and Chinese markets and commercial-vehicle awards in Europe, India and the U.S.
Full-Year Outlook Maintained, Margin Expected at Low End
HELLA maintained its fiscal 2026 outlook based on an assumption that global light-vehicle production will total 91.6 million units, down 1.7% from the prior year. Management expects the fourth quarter to be particularly weak for production, with global output forecast to decline 4.2%, including an expected 8.4% drop in China.
- Sales are expected in the upper half of the previously stated €7.4 billion to €7.9 billion range.
- Operating-income margin is expected at the lower end of the 5.4% to 6% guidance range.
- Net cash flow is still expected to equal at least 1.8% of sales.
Laier said the lower-end margin expectation reflects rising material-cost inflation, uneven volumes and unfavorable customer mix, as well as additional costs from complex Lighting launches. HELLA is negotiating reimbursement for material inflation with customers and assumes such compensation will be received during fiscal 2026.
During the question-and-answer session, Laier said most of the costs related to complex Lighting launches had been absorbed in the third quarter, though some impact would remain in the fourth quarter. He added that fourth-quarter margin improvement is expected to come from cost measures, customer compensation for inflation and normal year-end performance.
Looking ahead, Laier said semiconductor and printed-circuit-board costs could remain challenging in 2027. While HELLA is already discussing potential compensation with customers, he said it was reasonable to expect a softer first quarter before annual agreements are finalized.
About HELLA GmbH & Co. KGaA (ETR:HLE)
HELLA GmbH & Co KGaA, together with its subsidiaries, develops, manufactures, and sells lighting systems and electronic components for automotive industry worldwide. It operates through three segments: Lighting, Electronics, and Lifecycle Solutions. The Lighting segment offers headlamps, rear combination lamps, and car body lighting including radomes, illuminated logos, and front phygital shields, as well as interior lighting products. The Electronics segment provides automated driving products, such as radar sensors and steering electronics; sensors and actuators; body electronics, including lighting electronics and access systems; and energy management products.
