KSB SE & Co. KGaA (ETR:KSB) executives told investors the pump and valve maker delivered “another best year ever” in fiscal 2025, despite what management described as a turbulent macro backdrop marked by geopolitical uncertainty, trade disruptions, currency volatility, and economic slowdowns in key regions.
On the company’s earnings call, CEO Dr. Stephan Timmermann and CFO Dr. Matthias Schmitz highlighted record order intake, sales above the €3 billion threshold for the first time in KSB’s 155-year history, and an all-time high EBIT. Executives also discussed the cost and timeline for the company’s SAP S/4HANA transformation, the profitability trajectory of its valve business, and a cautious outlook for fiscal 2026 amid new geopolitical risks.
Fiscal 2025: Records in orders, sales, and EBIT despite currency headwinds
Schmitz said order intake reached €3.2 billion, while the company’s order backlog (orders on hand) increased to €1.7 billion. He cautioned that backlog is not a direct proxy for next-year sales because some large energy projects extend into 2029–2031, though he said a “rule of thumb” suggests about five to six months of sales coverage.
Sales exceeded €3 billion, aided by what management described as the execution of plans laid out the prior year. However, executives repeatedly emphasized foreign exchange as a meaningful drag. Schmitz quantified a €77 million currency effect on sales and said the order intake would have been €84.3 million higher if exchange rates had matched 2024 levels.
Profitability improved as well. Timmermann reported EBIT of €252 million—an all-time high—and a return on sales of 8.3% including SAP-related costs. He said excluding external SAP S/4HANA costs, return on sales would have been 9.2%.
SAP S/4HANA: €88–€90 million total cost estimate; go-live targeted for January 2027
Management described SAP S/4HANA as the largest transformation program in KSB’s history. Timmermann said KSB chose to expense costs as incurred rather than defer them, noting nearly €27 million in external consultant costs in 2025, plus productivity impacts from approximately 1,000 employees working on the project and a “software freeze” introduced by summer 2025.
Schmitz put the expected total cost of the program at approximately €88 million to €90 million through mid-2028. In the Q&A, he said KSB expects 2026 implementation costs “on almost the same level” as 2025, and emphasized that these external costs are “one-to-one cash affected.” He added that the project is in budget and is planned to go live in January 2027, with additional spending of about €12 million in 2027 and roughly €6 million in 2028 for process improvements.
Segment and operational highlights: SupremeServ, valves, working capital, and balance sheet
Schmitz noted that SupremeServ—KSB’s service and aftermarket business—generated €1,013 million in revenue, €23 million above 2024. He also pointed to softness in spare parts for mining and engineered business, plus a €24 million currency impact, saying that adjusting for FX shows the business “is doing okay.”
On margins, Schmitz said pumps generated high profit, while valves were around break-even when looking only at new business. He urged investors to consider valve spare parts included in SupremeServ; combining new valves and valve spare parts, he said the “whole of the valve business” was around a 5% return on sales.
Cost structure and operating discipline were also themes. Schmitz reported cost of materials at 39.5% of sales, down from nearly 41% in 2023, which he described as evidence of constant improvement. Staff costs rose to 35% of sales, which he attributed to hiring—primarily in India, plus additions in R&D, energy, and sales, and about 50 employees from newly consolidated companies.
Working capital increased to €860 million, with a cash cycle of 126 days and working capital at 28.8% of sales (calculated using average sales over the last 12 months). Schmitz said KSB has improved these metrics compared with 2018, when working capital was around 34% of sales and the cash cycle was roughly 134–135 days.
Schmitz said the balance sheet remained “reasonably good” and “sustainable,” highlighting an equity ratio of 48.3% and equity of nearly €1.4 billion, up €56 million year over year. He also pointed to a reduction in non-current liabilities largely driven by pensions due to updated interest rates.
Net financial position decreased to €315 million from €371 million in 2024. Schmitz attributed the change primarily to about €20 million from FX effects, €25–€26 million from working capital changes, and higher investment spending.
Dividend and value creation metrics
Schmitz reported earnings after tax of €166 million and said earnings attributable to shareholders were €141 million, with earnings per ordinary share of more than €80. He said KSB would propose a dividend of €26.50 per share, representing a payout ratio of 33%. He characterized that as consistent with management’s communicated target range of 30% to 40% and said the company maintained the dividend level set previously.
The CFO also highlighted return on invested capital, saying it exceeded the company’s weighted average cost of capital (WACC) of about 8.3%. He said KSB had created approximately €60 million of value in recent years using that measure.
Outlook for 2026: Geopolitical risk, cautious guidance, but continued growth opportunities
Turning to fiscal 2026, Timmermann said the operating environment has become more challenging due to the Iran conflict and its ripple effects across fuel and energy prices, logistics, inflation, interest rates, and investment sentiment. He cited immediate impacts including more expensive air freight and congestion or closures at some ports serving the Middle East.
Management said January and February were weak in order intake and turnover relative to internal hopes, though Timmermann said early months are typically seasonally weak, especially when Easter falls early. Executives said the company’s guidance corridor reflects the current situation, including Middle East uncertainty, and that KSB is aiming to remain reliable in its forecasting.
Schmitz said the changed outlook versus mid-February was driven mainly by the Iran crisis and heightened investment reluctance, while also noting that order growth remained possible. Timmermann pointed to energy and water as ongoing demand drivers and said KSB recently booked one of the largest orders in company history—an energy-related order of more than €150 million for pumps to be produced in Germany.
In response to questions about pricing power, management said competitive pressure has increased, particularly from Chinese competitors expanding abroad as China’s domestic market weakens. Schmitz said KSB can still raise prices, but increases are now more modest—citing about 1.5% as a typical level depending on region.
On capital spending, Timmermann said KSB will remain “extremely prudent,” but stressed that investment is necessary to support growth, local presence, and in some cases local production requirements. He said globalization is not returning to prior norms and that being local is imperative.
For valves, Schmitz said KSB has already achieved about a 5% return on sales for the overall valve business when including spare parts. He outlined measures to improve profitability, including initiatives at the La Roche-Chalais plant, shifting products to China, and exiting the unprofitable cryogenic valve business. He said he expects profitability in the new valve business to be positive in 2026.
Management reiterated that KSB expects to navigate 2026 within a corridor that ranges from another “best year ever” on the high end to results slightly below 2025 on the low end, depending on how external conditions evolve.
About KSB SE & Co. KGaA (ETR:KSB)
KSB SE & Co KGaA, together with its subsidiaries, manufactures and supplies pumps, valves, and related services worldwide. It operates through three segments: Pumps, Valves, and KSB SupremeServ. The Pumps segment offers single and multistage pumps, submersible pumps, and associated control and drive systems. The Valves segment provides butterfly, globe, gate, control, diaphragm, and ball valves, as well as associated actuators and control systems. The KSB SupremeServ segment is involved in the installation, commissioning, start-up, inspection, servicing, maintenance, and repair of pumps, valves, and related systems for various applications; modular service concepts and system analyses for complete systems; and spare parts for pumps and valves.
