Coffee, biosimilars and cool cars

At Lux Opes, we break down companies into quick takes that get straight to the point - what is happening, why it matters, and what to watch next. We publish 2-3 times per week, depending on the news flow.

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Financial KPIs

* Next fiscal year (FY+1). Upside = gap to the average 12-month analyst target. Local currency; market cap in millions. Source: Bloomberg, analyst consensus.

Allegro (ALE Poland): Peace with InPost pays off

Allegro has raised its 2026 outlook for the second time this year, and most of the latest increase comes from one contract. A new framework agreement with InPost, running until the end of 2031 with an option to extend by two or three years, brings lower delivery rates and volume-based pricing, carries a minimum contract value of about PLN 8bn and ends a long and public dispute between Poland's largest marketplace and its main parcel locker operator. Because the lower prices apply retroactively, they add PLN 270–280m to this year's adjusted EBITDA, roughly 90% of the upgrade to Polish EBITDA guidance.

The underlying business needed no help. Polish GMV grew 14.7% to PLN 18,624m in the third quarter, with items sold up 10.7% and average selling prices up 4.4%, and management credits stronger demand and easing competition. GMV is growing about 2.4 times as fast as Polish retail sales. Active buyers rose 3.9% to 15.83m, spending per buyer increased 7.4% to PLN 4,580 a year, and the Smart! loyalty program now has more than 7.8m members who buy roughly seven times a month. Allegro is deliberately giving back some take rate, which fell 0.44 points to 12.54%, to stay competitive on price.

The new group guidance calls for GMV of PLN 79.5–80.5bn, 15–16% growth, revenue of PLN 13.6–13.7bn and adjusted EBITDA of PLN 4.2–4.3bn, up 22–24%. Excluding the InPost effect, Polish EBITDA would grow 11–14%, which is still a step up from the previous guidance. Polish GMV grew around 16% in the first five weeks of the fourth quarter, faster than the guidance implies, against a weak comparison base.

International remains the drag, though a shrinking one. GMV outside Poland should grow about 80% this year to PLN 4.8–5.1bn, faster than previously planned, while the expected EBITDA loss stays at PLN 0.47–0.49bn and capex there is being cut to PLN 40m. With Permira's sell-down out of the way and the InPost conflict settled, the two issues that weighed on Allegro for years have been resolved within a few months. What is left is a dominant domestic platform growing at double digits with improving economics.

Salzgitter (SZG Germany): Third upgrade, and protection is working

Salzgitter has now raised its 2026 EBITDA guidance three times. The latest range, set on 28 October, is €800–875m, against €725–825m before and an initial €500–600m at the start of the year. The third quarter shows why. EBITDA reached €200m, close to twice last year's third quarter and €21m above the second quarter.

Several things are working at once. Steel Production, the largest division, is selling more steel at higher prices since the EU tightened its trade defences, and from July it fully consolidates HKM, the slab producer in which Salzgitter bought out the stakes of thyssenkrupp and Vallourec. That reclassification also explains the weaker numbers in Steel Processing, where HKM used to sit. The Aurubis stake contributed €13m more than in the second quarter, and Trading and Technology held steady at high levels. The P28 cost program saved another €49m in the quarter, after €97m in the first half. Net income looked even better, but €57m of it came from a non-cash revaluation of the exchangeable bond on Aurubis shares. Net debt fell to €708m from €792m in June.

The midpoint of the new guidance implies fourth-quarter EBITDA of about €179m, a little below the third quarter. Salzgitter has more going for it than at any time in recent years: protection at EU level, the German infrastructure and defence spending program, cost savings and the integration of HKM. For a steel producer, earnings remain exposed to prices, but the upgrades show that management has been conservative all year.

Ypsomed (YPSN Switzerland): A pure pen maker with room to run

Ypsomed sold its diabetes care business and is now a pure supplier of self-injection devices to pharmaceutical companies, and the first half shows how good that business is. Delivery Systems sales rose 17.6% to CHF 287m and segment EBIT grew 16.8% to CHF 102.3m, a 35.7% margin, only 20bp below last year. Group sales fell 12.4% to CHF 317.6m because of the disposal, while group EBIT reached CHF 99.8m.

The market is moving in Ypsomed's favour. Drugmakers are shifting injectable treatments out of hospitals and clinics and into patients' homes, helped by high-value biologics, the conversion of intravenous drugs to subcutaneous injections, biosimilars and above all the rapid growth of GLP-1 and other obesity and diabetes drugs. Ypsomed's exposure is broader than that, with recent wins in autoimmune and neurological diseases and oncology, and demand is moving towards larger, higher-viscosity doses that suit its 2.25mL device.

Management raised its guidance for Delivery Systems in fiscal 2026-27 to 13–16% sales growth, from 12–15%, and EBIT of CHF 220–240m, up CHF 10m. It expects some margin normalisation in the second half from factory ramp-up costs, mix and volume-based pricing agreed with customers, but profitability should stay clearly above 30%. It also said fiscal 2027-28 now looks materially stronger than it did six months ago, with more product launches and a smaller slowdown in growth. The longer-term ambition of CHF 0.9–1.1bn of sales and CHF 280–340m of EBIT by 2029-30 was confirmed.

The cost of that growth is a heavy investment program. Ypsomed invested CHF 130m in the first half and expects close to CHF 300m for the full year, the peak of its plan, so free cash flow was slightly negative despite CHF 117m of operating cash flow. It should turn positive in 2027-28 as capex falls, and leverage of around 1.0x EBITDA leaves room for acquisitions that could extend Ypsomed's role in the drug-device chain. Few medtech companies combine high-teens growth with margins above 30%, and the falling capital intensity from 2027-28 adds a cash flow story on top.

Vincorion (V1NC Germany): Growing 40% with a hoist problem on the side

Vincorion keeps growing at a pace few defence suppliers can match. Third-quarter revenue rose 40% to €87.5m and adjusted EBIT reached €17.9m, a 20.5% margin. Over nine months, revenue was up 41% to €237.7m, led by Vehicle Systems with 59% growth and Power Systems with 47%, while Aerospace grew more slowly because of currency effects. For context, the company generated about €240m of revenue in the whole of 2025, and about €145m in 2021, before the war in Ukraine.

Orders are running even faster. Vincorion booked €460m in the first nine months, almost twice its revenue, and the total backlog is close to €1.2bn, with €658m of it firm. Management expects order intake to stay strong in the fourth quarter and early 2027, and defence customers may shift from contracts for individual programs to framework agreements, which would make future revenue more predictable.

The fourth-quarter margin will be lower, at around 17.7% at the midpoint of the full-year guidance of €323–333m revenue and an 18.5–19.5% adjusted EBIT margin, raised in October. Management says R&D and project costs are falling into the last quarter and that it is adding structural costs to support growth. Some OEM customers are asking for lower prices, which Vincorion intends to offset with efficiency gains. Working capital should improve in the fourth quarter, allowing positive free cash flow for the year after minus €5.5m over nine months.

The setback is the electronic rescue hoist. Airbus received the first unit in late September to begin flight trials, but vibration tests then revealed a technical fault. The company thinks it has found the cause, but the timeline, originally the fourth quarter of 2026, may slip, with deliveries now targeted for 2027. The 2026 guidance already allowed for the delay, and the hoist is a small part of revenue next year.

Vincorion listed in March at €17 a share and has had a volatile time on the market since. At around 14x next year's EV/EBIT, the valuation is modest for a company growing earnings this fast with a backlog of more than three years of revenue.

De'Longhi (DLG Italy): Professional coffee is the profit engine

De'Longhi's third quarter shows how much the professional coffee business has changed the group. Professional Coffee, built around La Marzocco and Eversys, is only 18% of revenue but grew 36.5% at constant currency, on the trend towards premium espresso, and it earns structurally higher margins than the household products. That helped lift adjusted EBITDA 15.3% to €171.6m, a margin of 18.2%. Excluding €4.8m of customs duty refunds, the margin was 17.7%, still 70bp higher than a year earlier.

The Household business, 82% of revenue, grew 3.1% at constant currency. Home coffee grew at a mid to high single-digit rate, helped by automatic machines and premium launches, and food preparation grew slightly thanks to Kenwood and Braun hand blenders. The remaining categories fell by low teens, as Braun irons could not offset a slowdown in comfort products such as heaters and air conditioners. Group revenue rose 7.7% to €944.9m, or 7.3% at constant currency.

Growth was broad across regions. In Europe, sales rose 5.7%, with Northern Europe resilient and France, Spain and Portugal growing at double digits, while Germany was weak. The Americas grew 9.2%, slower than the 19.6% of the first half, Asia-Pacific accelerated to 6.4% and the Middle East, India and Africa region rebounded 17.8%, led by Turkey and South Africa. Over nine months, adjusted EBITDA rose 16.9% to €455.2m, a 17.4% margin, with higher volumes adding €89m and cost control €16m, while household price and mix took away €31m.

De'Longhi has just increased its bet on that business. In October it bought the entire stake held by DLI Limited in the professional coffee division, raising its own holding to 88.02% from 61.56%, for about €662.5m in cash. The deal values the division at an enterprise value of €2.36bn. Over the 12 months to June, it generated €569m of revenue, up 38%, and €172m of adjusted EBITDA, a 30.2% margin, roughly twice the group average. Since La Marzocco and Eversys were combined at the end of 2023, its revenue has grown by more than half and EBITDA has doubled, and its equity value has almost doubled to €2.5bn. De'Longhi is paying from its net cash of €687m at the end of June, supplemented by dedicated loans.

Management confirmed mid-single-digit revenue growth for 2026 and raised its adjusted EBITDA target to €685–705m, from €670–690m, including the customs refunds and pressure from the economic and political environment, and said business remained buoyant in the fourth quarter. Even after the buyout, the balance sheet leaves room for further acquisitions. The valuation is in line with De'Longhi's history, although a growing share of profit now comes from a professional business that earns 30% margins and grows at close to 40%.

1&1 (1U1 Germany): Earnings recover, customers keep leaving

1&1's earnings are recovering, but its mobile business is still losing customers. The company lost 90,000 mobile contracts in the third quarter, fewer than the 150,000 of the second quarter, and added 10,000 broadband customers. Revenue was stable at €1,132m.

Profitability is improving from a low base. Reported EBITDA fell 11% to €151m because of about €60m of restructuring costs at 1&1 Versatel, the fixed-network subsidiary, but excluding those one-offs adjusted EBITDA grew 25%. Management confirmed its 2026 guidance of stable service revenue and EBITDA of about €800m excluding the Versatel consolidation, an increase of 49%, as the costs of building its own mobile network and the migration problems of the past fade.

The parent company, United Internet, reported group revenue up 2.5% to €1,547m and EBITDA up 20% to €387m excluding the Versatel restructuring costs, or €325m reported. Most of the improvement came from IONOS, the group's hosting business, while 1&1 grew revenue by only 0.5%. United Internet expects 2026 revenue growth of 2%, to €6.25bn. There is still no sign of a combination with Telefónica Deutschland, which has long been seen as a logical way to fix 1&1's position in the German mobile market. Until customer losses stop, the EBITDA recovery will mostly come from lower costs.

ACS (ACS Spain): A quarter of the order book is now data centres

ACS's backlog reached a record €111bn at the end of September, 24% higher than a year earlier and 27% on a comparable basis, equivalent to more than two years of sales. The composition is changing fast. Data centre projects grew 94% to €26bn, now 23% of the total, and critical minerals, energy, water and industrial projects rose 76%. Orders over nine months came to €56.2bn, about 30% more than a year earlier, for a book-to-bill ratio of 1.4x over the last 12 months.

The results were solid. Nine-month EBITDA rose 13% to €2.5bn, and sales grew 13.7% at constant currency. Turner, the US builder, grew sales 23.8% and EBITDA 41%, with the margin up 62bp to 4.0%, and Engineering & Construction added 9.5% sales growth and 23% higher EBITDA, at a 6.4% margin. CIMIC's margin fell 58bp to 11.5% because of portfolio mix, which kept the group margin at 6.1%. Ordinary net profit rose 35% to €789m, at the top of ACS's guidance of 30–35% growth for the year, to €1,110–1,155m, which was confirmed.

Cash generation improved during the quarter, and net debt fell 10% from June, giving ACS room to invest. Its last plan set out up to €6bn of investment capacity for 2026–2030, mostly in managed toll lanes, data centres and acquisitions, and the capital markets day is the occasion to update that figure.

The main concern in the market is the sustainability of AI-related infrastructure spending. ACS can point to its diversification, vertical integration and global presence, but with almost a quarter of its backlog in data centres, a slowdown in that market would hit the group hard. For now, it is the strongest growth driver in a business that is already growing earnings by more than 30% a year.

Sonova (SOON Switzerland): Taking share in a faster market

Sonova raised its outlook for the full year, and the reason is mostly its own execution. First-half revenue rose 6.7% to CHF 1,834m, or 7.5% in local currencies, and core EBIT increased 21.4% to CHF 384m, a margin of 20.9%. Earnings per share came in at CHF 4.22.

The strong run started last year. In fiscal 2025-26, CEO Eric Bernard reported the largest market share gain in six years, and Sonova has since decided to sell the Sennheiser consumer headphones and audio business, so the group is now focused entirely on hearing care. Wholesale, the hearing aid manufacturing business, grew 10.0% to CHF 968m, with 11% organic growth, well ahead of the market, so Sonova is gaining share. Asia-Pacific, around 10% of revenue and a region Bernard expects to become much larger, grew by a mid-teens percentage, and the Virto R and Infinio Ultra products sold strongly, while the newly launched EON platform made a first small contribution. Management now sees the hearing aid market growing 3–5% a year, up from 2–4%. Retail, its own network of hearing care shops, grew 6.5% in local currencies to CHF 749m, with 5.2% organic growth from both more customers and higher average prices.

Cochlear implants were the weak spot, as expected. Revenue fell 11.2% to CHF 117m, with pressure in China and the US. System sales were down 2.9% organically, and upgrades and accessories fell 27.2% ahead of the launch of the new Integro implant, which should support the division from here. Sonova now expects revenue growth of 6–8% in local currencies this year, from 5–8%, and core EBIT growth of 10–13%, from 7–10%. The profit upgrade comes even though the company is stepping up investment by a low double-digit percentage, which makes it more impressive. A stronger market, new products and clear share gains make this a good moment for the group, although the valuation already prices in much of that.

OMV (OMV Austria): Record refining margins, a stuck chemicals business

OMV is earning more from refining than ever. Its refining margin reached $37.50 a barrel in the third quarter, against $11.54 a year earlier, because the Iran war tightened supply, shipping was disrupted and Russian refineries were attacked. The Fuels & Feedstock operating result almost tripled to €1.1bn, and group clean operating profit rose 68% to €2.12bn, the best quarter since 2022. "We currently have the highest margin we have ever had in refining," CFO Reinhard Florey said. Austria's special energy levy cost OMV €200m in the quarter.

Chemicals went the other way. The segment's operating result was only €63m, with OMV's half of Borouge International contributing just €16m because polyolefin prices fell. Market conditions have improved since mid-August, and management expects better demand and margins in the fourth quarter. The integration is on track: Borouge International has already secured $200m of the planned $500m of annual synergies, which should start contributing in the fourth quarter. The planned listing of Borouge International has been postponed from 2026 to 2027, first in Abu Dhabi and then in Vienna.

The UAE is the main constraint. Crude oil produced there cannot be lifted in full, chemical plants have limited access to feedstock and product exports are restricted, which caps the benefit OMV gets from higher oil and gas prices. Volumes underlifted this year should be recovered later, but the timing is unclear.

Other projects are progressing. The Neptun Deep gas field in the Black Sea, a joint project with Romgaz, should deliver first gas in the first half of 2027, and OMV plans a €500m green hydrogen plant. New CEO Emma Delaney, who joined from BP in September and succeeded Alfred Stern after his 19 years at the company, inherits a company that is earning very well from refining but needs the chemicals business to work for its long-term strategy. After a strong run this year, the shares already price in much of the refining windfall, and the chemicals recovery has yet to arrive.

tonies (TNIE Germany): Pokémon and Bluey keep the figurines selling

tonies grew third-quarter revenue 27.6% to €179.9m, and figurines did most of the work. Tonie sales rose 35.4% to €131.0m, as new Pokémon and Bluey characters drew in buyers. Toniebox sales increased 12.6% to €43.9m against a tough comparison, since the Toniebox 2 launched in the same quarter last year, which shows the installed base is still growing. Accessories and digital products declined 5.6% to €5.0m. North America is now the largest growth market. Revenue there rose 42.1% to €72.7m, already more than in the home DACH region, which grew 11.4% to €68.3m. The rest of the world added 36.6% to €38.9m. Over nine months, group revenue grew 33.1% to €422.9m.

Management confirmed its guidance of more than €760m of revenue this year, more than 20% growth at constant currency, with North America up more than 30% and an adjusted EBITDA margin of 9–11%. The fourth quarter, with Christmas, accounts for a large part of annual sales and profit, so the year will be decided in the next few weeks.

Five years after its listing through a SPAC, tonies has proved that its system of a speaker plus collectible figurines is more than a fad. Each box sold leads to repeated figurine purchases, and licensed content keeps that cycle going. The next step is converting growth into higher margins, and the 9–11% target for this year is still modest for a business of this scale.

FACC (FACC Austria): The margin recovery is finally real

FACC's third quarter confirmed what investors have been waiting for. Revenue rose 29% to €274m and EBIT reached €14.6m, a margin of 5.3%, against 1.4% a year earlier, as higher volumes and the first effects of the CORE efficiency program came through. Over nine months, revenue grew 15% to €800m, EBIT jumped 86% to €40m and the margin improved 190bp to 5%. Free cash flow doubled to €50m, even though a new investment cycle has started.

Management now expects 2026 to land in the upper half of its guidance, which is for revenue growth of between 10% and 15% and a 5.25–6.25% EBIT margin. That requires a very strong fourth quarter. Engines & Nacelles earned only 7.5% in the third quarter because development and certification milestones in advanced air mobility, mainly passenger drones, slipped. These should be reached in the fourth quarter, giving the division a full-year margin of about 12%, in line with 2024 and 2025. Cabin Interiors should benefit from the ramp-up of the Croatian plant, and Aerostructures from lower material costs.

The 2027 target of an EBIT margin above 8% stands. Management stresses that the starting point is the fourth quarter, not the 5% of the first nine months, and that continued CORE savings, especially on raw materials, productivity, volume and the recovery in Cabin Interiors should get it there. It acknowledges that aircraft production rates are rising more slowly than expected two or three years ago, but says that is already in the plan. About 30% of 2027 US dollar exposure is still unhedged, which could help if the dollar strengthens.

A new €190m syndicated loan secures financing on better terms. FACC has disappointed on margins for years, so the fourth quarter is a real test. If it delivers, the >8% target for 2027 becomes credible, and the shares are priced for much less.

Merck KGaA (MRK Germany): Chips and bioprocessing cover for the patent cliff

Merck raised its 2026 guidance on the strength of two businesses, and both are moving faster than expected. Life Science grew 6.1% organically in the third quarter to €2,411m, led by Process Solutions, which supplies the biopharma industry and grew 11%, or 12% excluding tariff effects, partly because some orders were brought forward from the fourth quarter. Electronics did even better, with organic growth of 13.3% to €948m, as semiconductor solutions grew 19% while optronics fell 1%. Both businesses are highly profitable: Life Science earned EBITDA pre of €736m, a 30.5% margin, and Electronics €279m, or 29.4%. Within Life Science, Advanced Solutions and Discovery Solutions grew a more modest 4% and 2%.

Group revenue rose 5.8% to €5,627m, or 5.1% organically, and EBITDA pre increased 0.8% to €1,682m, a 29.9% margin. The new guidance calls for revenue of €21.5–21.9bn, EBITDA pre of €6.2–6.4bn, up from €5.9–6.3bn, and EPS pre of €8.30–8.70. Electronics now expects 10–11% organic growth, from 6–9%, with revenue of about €3.6bn and EBITDA pre of about €1.1bn. Life Science narrowed its target to 6–7% organic growth, with EBITDA pre of €2.75–2.85bn.

Healthcare is where the pressure sits. Organic growth was only 0.9%, at €2,268m, as the multiple sclerosis drug Mavenclad fell 25%, Bavencio 14% and Rebif 12%. Rare diseases grew 41% and the segment still earned €819m of EBITDA pre, a 36.1% margin, but Merck's guidance assumes no US Mavenclad sales from November, after generic competition arrives. Healthcare revenue should decline 2–3% organically this year.

Merck is also doubling down on Life Science. In June it agreed to buy Bio-Techne for $11.3bn, its largest deal in more than a decade, adding research tools, bioprocessing and advanced therapy capabilities. In Electronics, CEO Kai Beckmann has pointed to AI-related spending and customers still reporting capacity bottlenecks for AI technologies.

The quarter shows the value of the group's mix. Losing exclusivity on a major drug would hurt a pure pharma company badly, but Merck can lean on Process Solutions as biopharma investment recovers, and on Electronics as AI chips need more advanced materials. The healthcare decline will continue into next year, so the question is how fast the other two businesses can grow to absorb it.

CAF (CAF Spain): The bus boom is fading

CAF's results show the bus business it bought, Solaris, slowing sharply after two exceptional years. Solaris booked only 227 buses in the third quarter and 952 so far this year, and the group's order intake fell 10% in the quarter to €881m. Over nine months, orders still rose 21% to €4,916m. More worrying for margins, Solaris's price and mix turned negative at around minus 15% in the third quarter, after plus 18% in the first half.

Sales rose 13% in the third quarter to €1,122m and 15% over nine months to €3,649m. Rail grew only 3% in the quarter, with no acceleration from the first half, while Solaris grew 51%, after 59% in the first half. The group EBIT margin improved 60bp to 5.7% over nine months but was only 5.2% in the third quarter. Net profit rose 31% to €131m over nine months, though higher financial expenses are starting to weigh.

The fourth quarter will be harder. CAF confirmed its guidance of a book-to-bill ratio above 1x, high single-digit sales growth and an EBIT margin above 2025's 5.5%, and expects close to 10% sales growth for the year. That implies a slight acceleration in rail but a marked decline at Solaris, which delivered 607 of its 1,631 buses in the fourth quarter of 2025. The large number of new train approvals due also creates uncertainty in the rail business.

Management cites a strong pipeline in Europe, the US and the Middle East, and will present its 2030 targets on 22 December. Those targets need to be convincing. The shares trade at a clear premium to their five-year average on EV/EBIT, which leaves little room for a weaker bus market and a slow rail business.

IONOS (IOS Germany): AI is bringing in new customers

IONOS is growing faster, and AI is part of the reason. Third-quarter revenue rose 9.0% to €353m, with web hosting up 8% and cloud solutions 21%, and adjusted EBITDA jumped 17% to €154m. The company added 90,000 new customers in the quarter, after 100,000 in the second.

The AI products are starting to sell. Momentum, the new name for IONOS's line of AI agents, had 50,000 customers at the end of September, including an AI phone receptionist, and the company has launched six new AI products since July, such as AI Presence and AI Marketing. For a provider with a huge base of small and medium-sized business customers, selling extra AI tools to existing clients is a cheap way to raise revenue per customer. Free cash flow fell 9% over nine months, but that is explained by the deconsolidation of the Adtech business, worth about €40m, and capex up 73%. The full-year capex guidance of €75–85m is unchanged.

IONOS is an almost entirely subscription-based business that generates a lot of cash and is now accelerating. At around 10x forward EBITDA, the valuation does not yet allow for that change.

Corbion (CRBN Netherlands): Innovation day with bidders in the background

Corbion used its innovation event in Gorinchem to show how its fermentation and microbiology expertise could produce growth again. Management presented four platforms: natural preservation, a €250m market growing 7% a year; sustainable lipids in a €2bn structured lipids segment; fermentation-based antioxidants, a €300m segment; and specialised peptides and proteins, each with revenue potential of several hundred million euros. It expects the current risk-adjusted pipeline to add 1.5–2.0% a year to sales growth, together with 10–20% productivity gains and cumulative variable cost savings of around 5% by 2030.

There was evidence behind the plans. Predictive preservation tools are used by more than 150 customers this year, supporting a pipeline above €100m and more than €25m of business already won. Corbion says sharper portfolio focus has made innovation four times faster, and new solutions or more efficient processes already account for over a fifth of sales. It spent 3.4% of revenue, or €43m, on innovation and application in 2025, and sees room to increase that.

The timing is interesting. In October, Bloomberg reported that the French yeast producer Lesaffre was considering a bid and discussing financing, with Rothschild and Boston Consulting Group reportedly advising. A week later, CVC was reported to be examining a possible offer as well. Corbion has not commented on any approach, and no bid has been made.

The business needs the growth. Adjusted EBITDA fell to €88.8m in the first half from €106.6m a year earlier, and the 2026 margin target was cut to above 16% from about 17%. Corbion has historically pushed innovation from the lab more than it developed products on customer demand, and the new approach still has to prove it can turn into sales. With the shares at the lower end of peer valuations and two potential bidders reported, the innovation story strengthens the board's hand in any negotiation.

Rolls-Royce (RR UK): Power Systems is becoming the second engine

Rolls-Royce's trading update was short on figures, but what it said was reassuring. Large engine flying hours, which drive most of its civil aerospace revenue, rose 4% year-on-year over the first ten months to 114% of 2019 levels, putting the full year at the low end of the 115–120% range. Flying hours from Middle Eastern customers are back above pre-conflict levels, and there is still no sign that airlines are retiring older Trent 700 engines faster. Those engines feed the aftermarket, where most of the profit comes from.

The faster growth is in Power Systems. Order intake rose 62% over nine months and gas engine orders tripled, on strong demand for prime power solutions for data centres. Defence aftermarket performance is also improving.

Management confirmed 2026 guidance of £4.7–4.9bn of underlying operating profit and £3.8–4.0bn of free cash flow, helped by higher margins on long-term service agreements, contract catch-ups in civil aerospace and better profitability in Power Systems. It will update its medium-term targets with the full-year results, and it launched a further £1.5bn buyback, running until late February 2027, within its plan to return £7–9bn to shareholders.

The turnaround under CEO Tufan Erginbilgiç has been dramatic, and much of the cash benefit from longer time on wing and repriced contracts is still to come. The shares are no longer cheap, with a free cash flow yield of about 4.4% next year, so the medium-term targets will need to be raised again to justify the price.

Mister Spex (MRX Germany): The shops work, the webshop doesn't

Mister Spex's sales are falling more slowly, but the company still has an online problem. Third-quarter sales dropped 4% to €46m. Online sales fell 8%, while the store network grew 4%. In prescription glasses, which are 46% of sales, offline growth of 17% partly made up for a 24% decline online. Sunglasses fell 7%, with online stable and stores down 16%, and contact lenses were broadly flat. Over nine months, sales were down 8% to €134m, with online down 16% and offline up 8%. Margins are under pressure. The gross margin fell 74bp to 54.0% in the quarter, and adjusted EBITDA was €1.9m, against €2.1m a year earlier and €2.6m in the second quarter, as the lower gross margin and weak market offset cost savings. Over nine months, the gross margin still improved 104bp to 55.9% and adjusted EBITDA reached €5.7m.

The SpexFocus restructuring is moving faster than planned. Logistics has been transferred to Arvato and prescription lens production to Rodenstock, both ahead of schedule, and the Salesforce rollout now covers marketing and customer service, with the Swedish webshop going live by the end of 2026. The faster pace has a cost: year-end cash is now expected at €21–23m, down from €25–30m.

Guidance is unchanged, with sales down 0–10% and an adjusted EBITDA margin between breakeven and mid-single digits. The asset-light model should make Mister Spex more flexible, but with cash falling and online sales still shrinking, the company has limited time to prove the turnaround works.

Strabag (STR Austria): Second margin upgrade in three months

Strabag raised its 2026 EBIT margin target again, to 6–6.5% from the 5.5–6% it set only in August. Management credits large infrastructure projects that are earning more than planned, and a revival in asphalt paving in its North + West segment, where municipalities are spending more on road maintenance than expected. At the top of the new range, EBIT would be around €1.4bn, roughly 10% above last year's record. Ahead of September's capital markets day, the 6% margin target for 2030 already looked outdated, since Strabag had exceeded it two years running. This year's range now starts at that level.

Output grew 19% in the third quarter to €6.60bn, led by Germany, where energy, rail and high-tech industrial construction are expanding, and by the UK, Austria and the Czech Republic. North + West grew 30% to €3bn, South + East 7% to €2.36bn and International & Special Division 21% to €1.2bn. The full-year output target of approaching €23bn was confirmed, which implies slower growth in the fourth quarter after 14% over nine months.

The first half had already been strong, with output passing €10bn for the first time at the half-year mark and EBIT up 35% to €174m. The order backlog now stands at €34.97bn, 12% higher than a year earlier, although below the record €36bn reached in June. New orders fell 35% in the quarter, but only because the HARPS project in the UK added €2.5–3bn to the same quarter last year. The book-to-bill ratio was 0.85x in the quarter and 1.22x over nine months. By segment, International & Special Division grew 31% to €11.9bn on projects in Australia and Chile, North + West 6% to €14.6bn, and South + East was flat at €8.4bn.

The second margin upgrade of the year shows how much better Strabag's project mix has become. Germany's infrastructure program, demand for energy and rail construction and a strong execution record give it a long runway, and the company keeps delivering more than it promises.

Sandoz (SDZ Switzerland): Building the factory for the biosimilar wave

Sandoz's capital markets day centred on one opportunity: biological drugs with around $300bn of annual sales, at originator prices, will lose patent protection between now and 2032. The company wants to capture a large part of that through biosimilars. Its Bio100 strategy, presented in September, aims to more than double revenue to over $22bn by 2035 compared with 2025 and raise the adjusted EBITDA margin above 30%, from about 23% this year. Biosimilars should rise from around 30% of revenue to around 55%, and the portfolio from 13 products today to about 30 by 2030 and around 70 by 2035.

The third quarter showed the plan is already under way. Biosimilar sales grew 17% at constant currency to $998m, 34% of the total, while generics were flat, taking group sales up 5% to $2,942m, or 7% excluding lower sales of penicillin ingredients to other companies. North America grew 20%, led by biosimilars. Demand for biosimilars was in fact strong enough to cause temporary supply shortages in Europe and international markets, which, together with a tougher German market, led Sandoz to narrow its 2026 sales growth guidance to 5–6%. It raised the core EBITDA margin target to 23.0–23.5%, against 21.7% in 2025. The development pipeline now holds 40 biosimilar candidates, and the longer-term ambition is more than 100 biosimilars by 2040.

The new production site in Lendava, Slovenia, which investors visited, is the backbone of that plan. It is now going through certification and should start producing for patients in 2028, first with existing biosimilars transferred under the collaboration with Novartis, then with new products. Once Sandoz decides to expand, the two existing lines can become four in a year to 18 months, and there is room on the site to duplicate the plant, for eight lines in total. A second biosimilar facility using disposable technology is planned in Ljubljana. The related investment is already included in the capex plan of about $1.1bn a year until 2030.

Sandoz wants to stay vertically integrated, with at least 60% of projects developed in-house and the rest through partnerships, notably with Novartis and Samsung. These share profits, but development costs are lower, so profitability is broadly similar. As the leading generics company in Europe and one of the top three in the US, Sandoz has the commercial reach to sell what it develops.

The main uncertainty is demand. How fast each new biosimilar is adopted, and how many competitors launch alongside it, is hard to predict, and the company itself says the ramp-up is difficult to assess. Sandoz has built the industrial base for its ambitions, but the market already assumes much of the plan will be delivered, so execution on launches needs to match.

Sixt (SIX2 Germany): A busy summer lifts the year

Sixt had a strong summer and raised its revenue guidance as a result. Third-quarter revenue rose 11.8% to €1,480m. Europe, 43% of group revenue, grew 14.7% on high summer demand, Germany 11.1% and North America 7.7%, or 7.3% at constant currency, slightly slower than in the first half. Over nine months, revenue increased 10.2% to €3,598.6m. Profit grew more slowly than sales in the peak quarter. Pre-tax profit rose 9.0% to €281.8m, a margin of 19.0%, 50bp lower than a year earlier. Over nine months, though, EBT increased 16.9% to €406.9m and the margin improved to 11.3% from 10.7%, thanks to disciplined fleet management.

Sixt now expects revenue of almost €4.7bn this year, growth of 9.7%, up from €4.45–4.60bn, and still targets an EBT margin of around 10%, or about €470m, against 9.4% in 2025. Management intends to keep fleet management strict and be even more careful in volatile periods to keep utilisation high, while investing in technology and automation.

The premium positioning and international expansion, especially in the US, keep driving growth. At around 10x next year's earnings, about 30% below the historical average, the valuation is low for a company growing revenue at close to 10% and improving margins.

CSG (CSG Netherlands): The ammunition boom is cooling faster than expected

CSG cut its 2026 EBIT margin target to about 21%, from 24–25%, without any prior warning, only a few months after confirming the old range in the spring. Third-quarter revenue fell 12% to €1.51bn and operating EBIT dropped 21% to €317m, a margin of 21%. The full-year revenue guidance of €7.4–7.6bn was kept.

Ammunition prices are the main problem. According to management, prices for standard-range ammunition initially fell by around 20%, and demand is shifting to extended-range rounds much faster than expected: standard ammunition is now 30% or less of demand, against the 40–50% CSG had assumed. Prices for extended-range ammunition are stable, but inventories of standard rounds will be run down through the fourth quarter and 2027, weighing on margins. The recovery depends on bringing propellant and energetics production in-house, which is not expected until late 2027 or early 2028.

The mix is also changing. Land Systems now makes up 57% of the order book, up from 40% at the end of 2025. Its revenue is growing fast, but it earns much lower margins than ammunition.

Cash flow has deteriorated too. CSG now expects working capital of less than 35% of revenue at year-end, instead of less than 20%, and some deliveries and payments have moved into 2027. The company has committed €700m of financing to suppliers, a sign that securing supplies is still difficult, and it is spending about €350m on a 9.5% stake in MDA.

All this comes after a difficult spring. In May, the short seller Hunterbrook accused CSG of repackaging and reselling old ammunition instead of producing its own, of overstating production capacity and of failing to disclose a €1.4bn minority put option before the IPO, and it pointed to the NATO procurement agency's suspension of the Spanish propellant subsidiary. CSG rejected the claims. A surprise cut of this size makes it harder for management to rebuild trust in its reporting, and that will weigh on the shares until margins stabilise.

Dermapharm (DMP Germany): The branded core keeps carrying the rest

Dermapharm's branded drugs business remains the reason to own the company. Branded Pharma revenue rose 8.1% to €486.2m over nine months, with strong organic growth in Germany and abroad plus contributions from the Mucos and F. Trenka acquisitions, and adjusted EBITDA increased 6.7% to €213.0m. The margin was 43.8%, against 44.4% a year earlier, still exceptionally high.

The other businesses are weaker. Other Healthcare Products, which includes supplements and natural remedies, saw revenue fall 2.6% to €261.9m because of seasonal, regulatory and demand-related pressures, and EBITDA slipped 2.1% to €41.2m, although the margin held at 15.7%. Parallel Imports shrank 9.5% to €136.3m as the portfolio was trimmed and remained loss-making at minus €2.0m of EBITDA, as lower costs could not make up for a falling gross margin.

At group level, revenue grew 1.7% to €884.4m and adjusted EBITDA 5.1% to €248.1m, lifting the margin to 28.0% from 27.1%. Management confirmed its 2026 guidance of €1,182–1,218m of revenue and €331–341m of adjusted EBITDA, which requires fourth-quarter EBITDA of around €83–93m. The guidance looks achievable given the momentum in Branded Pharma. Dermapharm is a solid, highly profitable business, but the weaker divisions dilute growth, and the parallel import business in particular needs a clear decision, whether to fix it or exit it.

SMA Solar (S92 Germany): Back to profit, and cash is flowing

SMA Solar is profitable again. Third-quarter sales rose 5% to €474m, and EBITDA swung to €58m, from minus €26m a year earlier, a margin of 12.2%. EBIT came to €45m, against a loss of €104m, and earnings per share were €0.75, after a loss of €2.94. Adjusted free cash flow more than doubled to €113m in the quarter.

The inverter maker has also raised the bottom of its guidance. It now expects 2026 revenue in the upper half of its range, at €1,675–1,725m, previously €1,625–1,725m, and EBITDA of €205–230m, previously €180–230m. After €1,161m of sales and €146m of EBITDA in the first nine months, that implies a solid fourth quarter.

A year ago, SMA was restructuring after a collapse in demand for residential solar systems and heavy losses. The cost cuts and the recovery in sales have put the company back on a stable footing, and strong cash generation gives it more room to invest. The shares had been under pressure in recent weeks, and the upgrade shows the recovery is holding up.

Montana Aerospace (AERO Switzerland): A big fourth quarter, and space on top

Montana Aerospace's aerostructures business keeps getting stronger. Over nine months, revenue there rose 12.5% to €730m and adjusted EBITDA 17.9% to €130.8m, a 17.9% margin, on higher production rates, market share gains and better operating leverage. Group revenue grew 9.7% to €781.4m and adjusted EBITDA 13.7% to €129.1m, a 16.5% margin. The small Alpine Metal Tech business was weak, with revenue down 18.7% and EBITDA nearly halved to €2.9m, because of the timing of project deliveries.

The third quarter alone was less impressive. Revenue rose 5.9% to €262.9m and EBITDA 15.7% to €41.7m, a margin of 15.9%, below the 16.9% of the first half. Operating cash flow fell to €70.3m over nine months, from €87.1m, because of less factoring, inventory build-up and higher metal costs.

The balance sheet has been transformed. Proceeds from the sale of the energy business brought net debt down to €52.8m, or 0.3x EBITDA, and another €36.2m arrived in October, so Montana expects to have net cash soon. Management confirmed its targets of revenue above €1bn and adjusted EBITDA above €185m for 2026, which requires at least €55.9m of EBITDA in the fourth quarter, a much higher margin than so far this year. For 2027, it expects revenue above €1.1bn, EBITDA above €210m, an Aerostructures margin above 20% and free cash flow in the low hundreds of millions.

Space could add more. Management said the 2027 guidance could be raised early next year because of stronger demand from space customers. That would be welcome after a turbulent year, including the surprise departure of CEO Kai Arndt in April and a history of missing its own targets. At around 7x next year's EBITDA, against an average of about 9x for aerospace mid-caps, the valuation already allows for some of that risk.

init (IXX Germany): A temporary dip with a long order tail

init's third quarter confirmed the profit warning it issued on 2 November. Revenue rose 7.7% to €91.6m, but EBIT dropped to €1.6m from €8.7m a year earlier, because of a less favourable earnings mix and, to a smaller extent, valuation adjustments on projects. A tax credit lifted net income to €2.3m.

The cause is outside the company's control. Management blames the deteriorating situation in the Middle East and the resulting higher oil price, which has reduced demand from public transport operators for short-term, high-margin additional orders. Third-party materials have also become harder to source. It considers both effects temporary. For 2026, init now expects EBIT of €33–37m, down from €38–42m, while revenue of €380–410m and operating cash flow of €32–38m are unchanged.

The longer-term picture is strong. Orders rose 7% to €68.8m in the third quarter and 54% to €331.1m over nine months, and the order book grew 14% to €387.8m. Contracted performance obligations of €1.22bn cover several years of revenue. As a supplier of ticketing and fleet management systems for public transport, init benefits from large, multi-year projects and a growing share of cloud contracts. This year's weakness is in the short-term, higher-margin orders, and once that business normalises, margins should recover.

CEWE (CWC Germany): Waiting for Christmas, and for Kodak

CEWE's photo business is steady, and the company is preparing for its biggest change in years. Over nine months, revenue rose 2.4% to €451.6m. Photofinishing, the core business, grew 3.0% to €429.8m, with photobook volumes up 1.9% to 3.84m and revenue up 4.0% as customers chose more expensive products. Retail revenue fell 5.2% to €21.2m, because CEWE is deliberately selling fewer low-margin photo hardware items.

The third quarter is seasonally weak. Revenue was stable at €153.5m and operating EBIT was minus €1.1m. Reported EBIT was minus €4.3m, including €2.3m of transaction costs for the KODAK MOMENTS acquisition and €0.9m of additional IT costs from the SAP project. The sale of the Commercial Online Print business brought an after-tax gain of €25.2m, lifting nine-month net income to €21.4m from €1.2m.

The KODAK MOMENTS deal, agreed in July, is the bigger story. CEWE is paying an enterprise value of about €88m for a business with around €200m of annual revenue, about 37,000 connected photo kiosks in some 16,000 retail stores across 54 countries and a consumables plant in Windsor, Colorado. It extends CEWE's instant photo business into the US, Canada, Mexico and Australia. Closing is expected in the first half of 2027, and CEWE expects a positive EBIT contribution from the first full year, at a mid-single-digit margin, rising with synergies.

Guidance for 2026 is €780–810m of revenue and €75.5–81.5m of EBIT, a range that was lowered only to cover about €9.5m of deal costs. As every year, the Christmas quarter will decide the result. With the printing business sold and Kodak Moments coming, CEWE is turning into a more focused and more international photo group.