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Investing.com -- Shares of Ascom jumped 7% following the company’s latest financial results and forward-looking statements.
Despite reporting a decrease in organic order intake and sales for the second half of 2024, Ascom’s guidance for 2025 predicts low single-digit organic sales growth and an improved EBITDA margin, sparking investor optimism.
The company’s second half of 2024 saw a modest decline in organic sales, with a 0.5% year-over-year (YoY) decrease, leading to a full-year dip of 1.6%. This contraction was further reflected in the EBITDA, which fell 42% YoY, resulting in a margin drop to 7.6%.
The decline was attributed to lower sales, increased SG&A expenses, and a gross margin reduction. Nonetheless, Ascom announced a dividend of CHF0.10 per share and plans to initiate a share buyback program valued at up to CHF15 million.
In 2024, the healthcare sector, which represents 67% of Ascom’s sales, saw flat organic sales growth, affected by project delays and subdued hospital profitability. The enterprise segment also experienced a 1.6% decline in organic sales YoY.
Gross margins for the year decreased by 110 basis points to 46.5%, with the second half gross margin at 45.7%. The muted enterprise free cash flow of CHF4.5m was influenced by lower profitability and higher net working capital. However, the company maintains a net cash position of CHF18.6m.
Looking ahead, Ascom has set a positive tone for 2025, guiding for organic sales growth in the low single digits, with an EBITDA margin forecast of 9-10%. This guidance suggests a potential 210 basis point improvement YoY at the midpoint of the range, indicating EBITDA could reach approximately CHF27-29m.
The projections are slightly above current consensus estimates and represent a low to mid single-digit upside risk to consensus EBITDA. Ascom has also chosen to suspend medium-term guidance, focusing on the near-term outlook.
UBS analysts commented on the results, stating, "We expect a positive reaction given the encouraging EBITDA outlook and the new share buyback program, which should more than offset the lower dividend."
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