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Investing.com -- Sopra Steria Group SA (EPA:SOPR) saw its shares plummet roughly 13% in European trading Thursday after missing market expectations for 2024 and issuing a 2025 guidance that implies consensus downgrades.
The company’s Q4 revenues came in at €1.47 billion, 2% below consensus estimates. Organic growth declined 2.7% during the quarter, also worse than the 1.2% drop expected by analysts.
For the full-year 2024, revenues stood at €5.78 billion, with organic growth coming in at -2.7%, missing the company’s guide for broadly stable revenue on an organic basis.
Sopra Steria reported adjusted EBIT of €565 million for 2024, short of consensus estimates by 1%.
The operating margin stood at 9.8%, in line with both expectations. The margin expanded by 40 basis points year-over-year.
Free cash flow for the year reached €432 million, exceeding Sopra’s own guidance of "around €350 million."
The consulting and digital services firm noted that this included an exceptional cash inflow of €45 million related to the scheduled conclusion of a major migration program in Germany.
The company has proposed a dividend of €4.65 per share for the 2025 financial year.
Looking ahead, Sopra Steria’s guidance for 2025 projects organic revenue growth between -2.5% and +0.5%, with a mid-point of -1%.
The company expects an operating margin between 9.3% and 9.8%, which, according to Morgan Stanley (NYSE:MS) analysts "implies consensus downgrades in the mid single digit %."
It anticipates a difficult first half of 2025, with first-quarter revenue expected to decline between 5% and 6%, marking the lowest point of the year.
Sopra Steria said that market conditions in 2024 “deteriorated,” particularly in the fourth quarter.
“This is expected to continue in 1H25 given the ongoing uncertainty in Europe and particularly France,” Morgan Stanley analysts noted.
At the end of 2024, the company’s workforce had declined by approximately 1.5% compared to the previous year.
Analysts said they expect Sopra’s shares “to be down mid to high single digit %” today.