Knorr-Bremse AG

Knorr-Bremse reported Q2 2026 Group revenue of EUR 2.1 billion, with organic growth of more than 6% year over year. Operating EBIT margin was 14.2%, up 110 basis points year over year, and free cash flow was EUR 262 million in the quarter and EUR 294 million in the first half. Order intake was more than EUR 2.2 billion, and the company highlighted Q2 as its highest quarterly margin in 5.5 years. For 2026, management raised guidance to revenue of EUR 8.1 billion-EUR 8.3 billion, operating EBIT margin of 14%-14.5%, and free cash flow of EUR 750 million-EUR 850 million, with expectations toward the upper end of the range. Within divisions, RVS revenue rose 7% to EUR 1.18 billion and EBIT margin reached 17.5%, while CVS revenue rose to EUR 959 million and EBIT margin improved to 11.8%.

Marc Llistosella framed the quarter as evidence that BOOST has transformed Knorr-Bremse into a stronger, more resilient, and more profitable company. He stressed that both Rail and Truck contributed, that the HVAC sale completes the sellout program, and that the new Growth Beyond phase will focus on margin-accretive growth, smart capital allocation, and attractive technology areas. His tone was confident and forward-looking, emphasizing that the 2030 targets are grounded in delivered execution rather than hope.

Frank Weber emphasized operating leverage, disciplined capex, and working-capital discipline. He said capex was EUR 70 million, or 3.3% of revenue, net working capital improved to EUR 1.43 billion and 63 days, and the one-off tariff reimbursement in the U.S. added around EUR 20 million to net working capital. He also highlighted ROCE of 23.8%, up 250 basis points year over year, and reiterated a capital allocation framework centered on organic growth, a roughly 50% payout ratio, and selective M&A with strict financial guardrails.

Analysts pressed on why CVS guidance looked conservative versus implied Q3 run-rate, and management said North American truck assumptions remain cautious, with heavy-duty truck expectations around 260,000 units versus higher third-party estimates. On CVS margins, management said older peak margins are not directly comparable because the business now carries more R&D and technology investment tied to electrification and autonomy. Analysts also asked about M&A firepower, the CVS/RVS portfolio mix, and past deal execution; management said it would not jeopardize investment-grade status, described roughly EUR 5 billion of theoretical firepower, and defended prior acquisitions as value-accretive after restructuring. Questions on RVS orders and China were met with reassurance that rail order lumpiness was normal and that China high-speed market share is stable now but could rise going forward.