Street Calls of the Week
Investing.com -- Shares of SIG Group AG (SIX:SIGNC) plunged more than 18% on Thursday after the packaging company issued a 2025 profit warning, cut its sales guidance and suspended its dividend as part of a strategic review.
SIG said it now expects sales growth in 2025 to be low single-digit to flat, a reduction from its previous forecast of 3% growth at the low end.
It also lowered its adjusted EBITDA margin outlook to 24% to 24.5%, down from the earlier range of 24.5% to 25.5%. Jefferies said the new guidance “implies approximately 7-12%EPS cuts to 2025 EPS cons.”
The brokerage added that “challenging market conditions & that transformation program will impact growth.”
Shares are down 27% year to date. Jefferies noted that questions over further 2025 earnings cuts had persisted since the departure of SIG’s chief executive earlier this year and the reset of guidance at second-quarter results.
As part of its strategic review, SIG plans to divest what it described as smaller non-aseptic businesses that are considered non-core.
The move will trigger non-recurring charges of €310 million to €360 million, including €75 million to €100 million affecting EBITDA.
About 90% of the charges will be non-cash, “relating to impairments of customer relationships.”
In addition, SIG will pause its dividend for 2025. The Swiss company said it would prioritize reducing debt levels. Jefferies said that the suspension “will come as negative surprise.”
Jefferies also flagged broader sector effects, writing that there could be “some negative read across to STERV/BILL for liquid packaging board (LPB) vols & potentially HUH1V (on-the-go consumption).”
The brokerage said it expects volumes and demand to be weaker across the paper and packaging sector in the third quarter.