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Investing.com -- Nexity (EPA:NEXI)’s shares plunged more than 18% on Friday after the French real estate group on Thursday reported a sharp drop in revenue and profits for 2024, alongside a weak outlook for the year ahead.
Even after a major restructuring to improve focus and reduce debt, the company faces significant issues: a smaller backlog, less development, and a persistently weak real estate market.
The company posted a steep 17% decline in revenue to €3.5 billion, reflecting weaker sales in both residential and commercial real estate.
Operating profit dropped dramatically from €246 million in 2023 to just €2 million, while net profit swung to a €62 million loss.
The downturn was attributed to adjustments made to the company’s property supply, including the abandonment of over 100 development projects due to unfavorable market conditions. These cancellations led to write-downs of €172 million, further weighing on Nexity’s bottom line.
Nexity’s restructuring efforts, which included the sale of non-core assets and a redundancy plan, helped reduce its net debt by 44% to €474 million.
However, the company warned that it would not pay a dividend for 2024, citing the need to maintain financial discipline amid uncertain market conditions.
The company aims to return to profitability in 2025, but investors appeared unconvinced, leading to a sharp selloff in its stock.
While the company reported a 7% increase in retail sales, bulk sales to institutional investors, a key revenue driver, saw a notable decline. Additionally, Nexity’s development backlog fell 18% to €4.4 billion, signaling weaker future revenue prospects.