BofA warns Fed risks policy mistake with early rate cuts
Investing.com -- SIG Group AG’s (SIX:SIGNC) shares dropped over 11% on Tuesday after it issued a weaker-than-expected forecast for 2025, forecasting revenue growth of 3-5% at constant currency and constant resin, below the consensus estimate of 4.5%.
The company also expects an adjusted EBITDA margin between 24.5% and 25.5%, slightly under the 25% market expectation.
"2025 outlook mixed, with revenue growth slightly softer but EBITDA margin in line; we estimate 1-2% downgrades to 2025 consensus EBITDA," said analysts at Morgan Stanley (NYSE:MS) in a note.
While SIG delivered a strong fourth quarter, the softer guidance signals continued market uncertainty, which could weigh on investor sentiment.
For 2024, SIG reported 4.3% revenue growth at constant currency, in line with expectations, bringing total revenue to €3.33 billion, up from €3.23 billion the previous year.
The carton business remained the key driver, growing 6%, as SIG gained market share. Meanwhile, the bag-in-box and spouted pouch segment declined by 5% for the full year, though it returned to 2.5% growth in the second half after a weak start.
According to Jefferies, SIG delivered a strong Q4 performance, with EBITDA of €244 million, a 26.2% margin, and a 6% beat over the €229 million consensus estimate.
EPS of €0.81 also exceeded the €0.77 forecast, and free cash flow of €290 million surpassed market expectations (€250 million), driven by lower capital expenditures and reduced filler inventory.
Regionally, Europe posted 6.4% growth, supported by increased raw milk supply for aseptic processing and previous filler placements.
IMEA grew 13.5%, boosted by market recovery in Egypt and Saudi Arabia, while India recorded double-digit revenue growth, supported by new filling machines and the launch of SIG’s first aseptic sleeves plant in Q4.
In Asia-Pacific, growth remained muted at 1.7%, reflecting both a challenging prior-year comparison (13.9% in 2023) and weak consumer spending in China.
The Americas declined 0.7%, weighed down by operational issues in the bag-in-box segment and weak U.S. foodservice demand, though Mexico and Brazil showed volume growth.
Despite a strong Q4, Jefferies noted that SIG’s lower-than-expected 2025 guidance could put 0-4% downside pressure on earnings estimates, currently at €868 million EBITDA and €0.88 EPS consensus.
The company reaffirmed its mid-term revenue growth target of 4-6% and an EBITDA margin exceeding 27%, signaling confidence in the business model despite short-term challenges.
The board has also proposed a CHF 0.49 per share dividend, up from CHF 0.48, and nominated Ola Rollén as chair, pending approval at the April 2025 AGM.