Earnings call transcript: Stadler Rail H1 2026 results show record revenue but shares sink

Stadler Rail announced its H1 2026 financial results, reporting record revenue of CHF 1.96 billion, a 40% increase from the previous year. The company's EBIT margin improved to 4.0% from 2.6%, while order intake rose 60% to CHF 2.738 billion. Backlog reached CHF 33.3 billion, indicating strong future work visibility. Despite the robust growth in revenue and order intake, the stock price dropped by 21.94% to $28.82, reflecting investor focus on cash flow, profitability, and future margin expansion rather than top-line growth.

Management highlighted the strong operational performance, with revenue up 40% and production output increasing 10.5% to CHF 2.577 billion. The company attributed the results to higher deliveries, better execution, and the expansion of its services business. Stadler acknowledged that weak conditions in Germany and ongoing effects from flooding in Valencia impacted its performance.

The company's conservative "unit of delivery" accounting method causes reported revenue to lag behind actual production, meaning revenue was likely closer to CHF 2.6 billion under a cost-to-cost method. This discrepancy underscores the significant backlog of work Stadler has yet to recognize as sales.

Revenue growth outpaced the global rail market's growth rate of 4% to 6% per year, driven by major orders in commuter trains, metro systems, locomotives, and alternative propulsion vehicles. Stadler's backlog of CHF 33.3 billion provides substantial visibility into future work, despite the negative impact of the conservative accounting method and challenges in Germany and Valencia.