Knorr-Bremse (ETR:KBX) management said the company delivered a “strong” set of preliminary full-year 2025 results and met its guidance despite geopolitical uncertainty and a challenging truck market backdrop, while also outlining how its Boost program is moving from cost and portfolio actions toward margin-accretive growth initiatives.
Boost program shifts from cost base reset to growth focus
CEO Marc Llistosella said Boost phase one is “almost completed,” creating what he described as a “stronger and cleaner cost base” that enables the group to shift toward accelerating “margin accretive growth” in phase two while keeping strict cost discipline. He emphasized that Boost is intended to remain embedded as a management culture rather than a one-off effort.
On efficiency (“Fix It”), Llistosella highlighted progress reducing the group’s break-even by 400 basis points and said the company has reduced headcount by more than 2,400 over the past three years, with the majority coming from “real reduction measures” rather than divestments. He also pointed to footprint migration to lower-cost countries and the build-out of global shared service hubs.
2025 results: higher margins and record free cash flow
CFO Frank Weber said Knorr-Bremse generated “almost EUR 8 billion” in total revenues in 2025, with organic growth slightly positive. Weber attributed group margin improvement to rail’s contribution, regional mix, aftermarket performance, operating leverage, and structural initiatives under Boost Efficiency, resulting in a 70-basis-point increase in the group operating EBIT margin to 13%.
By division, Weber said Rail Vehicle Systems (RVS) achieved an operating EBIT margin of 16.5%, reaching its midterm target “ahead of schedule,” while Commercial Vehicle Systems (CVS) delivered a “resilient and stable” margin of 10.4% despite weak conditions in North America.
Weber said order intake and order backlog increased 6% and 8% year over year, respectively, on an organic basis. He also highlighted free cash flow of EUR 790 million, describing it as a new record on an operating basis, with a cash conversion rate of 131% (and 138% when including around EUR 80 million of one-off severance effects in 2025).
Balance sheet, cash discipline, and sustainability updates
On the balance sheet, Weber said year-end 2025 equity was almost EUR 3.2 billion, corresponding to an equity ratio of 36%. Liquidity stood at around EUR 1.7 billion, which he said was reduced “solely” due to repayment of a EUR 750 million bond maturity; on an operational basis, he said liquidity increased by nearly 15%.
Net debt declined 31% to EUR 627 million, and Weber said net debt to EBITDA was “just below 0.5.” He noted Knorr-Bremse’s credit ratings of A3 and A- remained stable with stable outlooks.
Weber said CapEx was EUR 319 million, or 4.1% of revenue, aligning with the group’s targeted 4% to 5% range. Net working capital declined by EUR 85 million year over year, improving efficiency by more than three days, which he attributed to the company’s “collect” program.
On sustainability, Weber said Scope 1 and 2 CO2 emissions have been reduced by 79% since 2018, keeping the company on track to meet its 2030 climate target of a 75% reduction. He added that self-produced renewable power increased by 41% and EU Taxonomy-aligned revenues rose slightly, mainly due to a comparatively higher share of RVS business.
Q4 details: rail margin strength and truck order recovery signs
For the fourth quarter, Weber reported order intake of almost EUR 2 billion with organic growth of nearly 6% and a book-to-bill ratio of 1. Revenues were close to EUR 2 billion with organic growth of more than 6%, and group operating EBIT margin rose to 13.5%. Free cash flow was EUR 471 million in the quarter, following what Weber described as a typical seasonal pattern.
In RVS, Weber said Q4 order intake was above EUR 1 billion, down 10% year over year, with a larger North American order in the “mid-double-digit million EUR range” shifting into 2026. RVS backlog at year-end was almost EUR 5.6 billion, near a record level, with organic growth of about 9% year over year. Q4 RVS revenues were nearly EUR 1.1 billion, up 3% reported and more than 7% organic, while the operating EBIT margin increased 140 basis points to 17% as the division worked through remaining legacy projects and benefited from operating leverage and efficiency measures.
In CVS, Weber said Q4 order intake was EUR 977 million, up around 10% year over year, with strong organic growth of 20% partially offset by M&A and FX headwinds. He said Europe and APAC were strong, while North America declined due to market and FX factors, but management pointed to improved sequential activity as a sign the region may have bottomed. CVS Q4 revenue fell 4% reported to EUR 881 million, though organic growth exceeded 5%. Operating EBIT rose 14% to EUR 99 million and margin improved 180 basis points to 11.3%, which Weber attributed to workforce adjustments, structural cost reduction, and aftermarket support.
2026 outlook and strategic growth areas: signaling, energy, and truck services
Management guided for 2026 revenues of EUR 8.0 billion to EUR 8.3 billion, an EBIT margin of 14%, and free cash flow of EUR 750 million to EUR 850 million. Llistosella said the company will provide updated midterm targets with the Q2 results at the end of July and suggested the framework will focus on a 2-to-3-year horizon.
On market conditions, management said the rail picture remains robust, with underlying demand supported by high order books and expectations for a full-year book-to-bill ratio around one or slightly above. In trucks, management said the outlook improved compared with three months earlier, with first signs of stabilization in North America and expectations for slightly higher demand in 2026, though the company is assuming a gradual recovery rather than a sharp rebound.
Management also discussed greenfield growth initiatives:
- Wayside signaling: Llistosella said KB Signaling is integrated and that 2025 focus was on cleaning up the project portfolio to improve quality and risk profile, which contributed to a slight revenue decline. The company aims to defend U.S. leadership and expand in markets using U.S. standards, and noted the acquisition of Duagon to strengthen electronics and system capabilities in Europe.
- Energy technologies: Llistosella said Knorr-Bremse has been active for more than 50 years in energy distribution through Solisco and, with Microelettrica, already generates meaningful and “highly profitable” revenues. In Q&A, he said the company is focused on supplying components such as instrument transformers, protection relays, and circuit breakers rather than competing directly with large players. He described Solisco as having grown from around EUR 50 million in revenue to roughly EUR 100 million to EUR 110 million in about two and a half years, with profitability in the 18% to 20% range, and said the group is open to both smaller and larger M&A “tickets.”
- Truck aftermarket services: Llistosella positioned the CVS service platform as an asset-light, data-driven ecosystem, citing Cojali as a base in diagnostics and workshop solutions with annual revenues of more than EUR 130 million and an “attractive” EBIT margin. He said Travis is central to bundling services for fleets in a brand-independent approach.
On M&A guardrails, Weber said the company is comfortable with net debt to EBITDA of 1 and could go higher for “good or great” opportunities with a clear path to margin-accretive growth. He cited financial criteria including a 14% return on sales hurdle rate, cash accretion, and ROCE above 20%, with an expectation that acquisitions should meet targets within roughly two to three years.
Management also discussed an ongoing push to use AI to improve productivity, saying the goal is to increase output per employee by automating repetitive work and deploying “AI agents” in areas like accounting and controlling, where Llistosella said early projects show “real effects” of 30% to 40%.
About Knorr-Bremse (ETR:KBX)
Knorr-Bremse AG, together with its subsidiaries, engages in the development, production, marketing, and servicing of braking and other systems for rail and commercial vehicles worldwide. The company operates in two segments, Rail Vehicle Systems and Commercial Vehicle Systems. The Rail Vehicle Systems segment offers braking systems, entrance and HVAC systems, sanitary systems, coupling systems, digital solutions, smart services for optimizing rail traffic, power electrics, rail computing and communication (RCC)/TCMS, signaling systems, stationary and mobile testing equipment, windshield wiper and wash systems, and extensive aftermarket solutions.
