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Investing.com -- Shares of Syensqo dropped 3% following the release of its first-quarter financial results, which revealed a decline in organic sales and a contraction in EBITDA margins.
Despite reporting group sales slightly above consensus, the company’s organic sales saw a 1.4% decrease, with volumes down by the same percentage and prices remaining flat.
The company’s outlook for the fiscal year remained unchanged with expectations for EBITDA to exceed €1.4 billion, aligning with consensus estimates of €1.38 billion.
However, this guidance does not account for uncertainties related to foreign exchange rates and tariffs, with current spot foreign exchange rates posing a €30 million headwind.
Capital expenditures are projected to be around €600 million, in line with consensus, and free cash flow is estimated at approximately €400 million. For the second quarter, Syensqo anticipates a sequential improvement compared to the first quarter, implying an EBITDA greater than €311 million.
Syensqo’s adjusted EBITDA for the quarter stood at €311 million, slightly above the consensus of €301 million, but the adjusted EBITDA margins contracted by 310 basis points YoY. The materials segment experienced a minor miss in adjusted EBITDA, coming in at €254 million compared to the consensus of €256 million, with margins shrinking by 480 basis points.
Sales in this segment were essentially in line with consensus, but organic sales dropped by 5.9%, driven by a 5.4% decrease in volumes and a 0.5% dip in price, despite a 1.5% positive impact from currency fluctuations.
Financial performance also showed signs of strain, with operating cash flow for the first quarter at €176 million, a decrease from €244 million in the same period last year.
Free cash flow to shareholders was significantly lower at €37 million compared to €157 million in the first quarter of the previous year. The underlying net financial debt stood at €1,932 million, representing 1.4 times the net debt to EBITDA ratio.
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