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Investing.com -- Shares of Cancom fell by 1% today after the company released its preliminary fourth-quarter results, which showed a revenue increase but a significant decline in profitability.
The technology firm reported that while its Q4 sales grew by 5% year-over-year (YoY) to €484 million, its earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped by 26% YoY to €26.6 million, falling short of the FactSet consensus by 18%.
The decrease in EBITDA margin to 5.5%, compared to 7.8% in the previous year, is attributed to the company not achieving the majority of its volume kick-backs due to a challenging market environment. This comes after management had already lowered its guidance for the year by 9% and 15% for the top-line and EBITDA midpoints, respectively, citing increased uncertainty from political developments in Germany and a weak macroeconomic landscape.
Despite the lower profitability, Cancom’s preliminary results for the fiscal year 2024 landed at the high end of the updated outlook for sales but at the lower end for profits. The company’s operating cash flow saw a substantial improvement, reaching nearly €100 million this year, up from €192.9 million, with €134.4 million generated in the fourth quarter alone.
For the full fiscal year 2024, Cancom’s preliminary figures indicate revenues of €1742.2 million, marking a 14.4% increase YoY and slightly above the FactSet consensus. However, the gross profit rose by 19.1% YoY to €693.3 million. EBITDA for the year was €113.1 million, down 2% YoY with a margin of 6.5%, and earnings before interest and taxes (EBITA) were €59.4 million, a 7% decrease YoY with a margin of 3.4%.
Looking ahead, Cancom is expected to release its new guidance for fiscal year 2025 along with its audited results on March 31. The current consensus for FY25 EBITDA is €129 million, which would represent a 14% growth YoY. Investors seem to be reacting cautiously to the preliminary results, focusing on the company’s profitability challenges rather than its revenue growth.
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