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Investing.com -- SIG Group AG on Tuesday recorded €320 million in pretax nonrecurring charges in the third quarter but maintained its previously lowered 2025 guidance.
The Swiss packaging systems provider also expects a further €40 million in exceptional costs in the fourth quarter, bringing total nonrecurring items to the upper end of its €310 million to €360 million range.
Jefferies in a note said the charges were “made up of €100m impairment related to bag-in-box & spouted pouches, €85m impairment to China chilled carton business, €75m relating to aseptic (reassessing required capacity in weaker market), €55m relating to equipment, spare parts & capitalised development costs and €5m restructuring.
The company reported a 3.9% decline in third-quarter organic sales, compared with gains of 3.8% in the first quarter and 1.6% in the second quarter.
Jefferies attributed the drop to a “deteriorating backdrop” and customers adjusting inventory levels as consumer confidence weakened. The brokerage said third-quarter sales performance was “worse than expected, but earnings in-line.”
Adjusted earnings before interest, taxes, depreciation and amortization totaled €184 million for the quarter, with a 24% margin. Including €61 million in nonrecurring costs, total EBITDA stood at €123 million.
The figure was broadly in line with the consensus estimate of €183 million and Jefferies’ forecast of €186 million.
The brokerage noted that SIG’s leverage ratio rose to 3.3 times net debt to EBITDA from 3 times in the first half of the year, while free cash flow reached €55 million.
SIG reaffirmed its 2025 outlook first issued on Sept. 18, projecting organic sales to be “slightly negative to flat” and an EBITDA margin between 24% and 24.5%.
Jefferies said the range implies an approximately 21% margin when including €75 million to €100 million in nonrecurring costs. The company plans to update its midterm guidance at its investor day on Oct. 30.
Jefferies maintained a “buy” rating on SIG shares with a price target of CHF12.00, representing a potential 34% gain from the previous closing price of CHF8.97.
The brokerage said SIG’s shares have “underperformed YTD, down -47% in EUR (vs Stoxx600: +13%) and has derated to 13x 2026E PE (5yr avg: 22x).”
Jefferies added that SIG “needs to rebuild conviction in its ability to deliver FCF, its growth EPS algorithm and that at its core its business is still that of defensive packaging provider exposed to resilient end markets via its "razor & razor blade" model selling aseptic cartons (i.e. long-life milk).”