MUNICH (dpa-AFX) - The IT service provider Nagarro has increased sales in the second quarter, but earned significantly less due to disproportionately high personnel costs at weak capacity utilization. Already last Friday, the management had also again lowered its targets for 2023 after the close of the stock exchange. Investors reacted disappointed on Monday - the first trading day since the news became known: Nagarro shares lost almost nine percent shortly after the start of trading and were thus quoted at the level of January 2021.

As the SDax-listed company announced in Munich on Monday, sales for the months April to June rose by 8 percent to 226.8 million euros. However, earnings before interest, taxes, depreciation and amortization (Ebitda) adjusted for special items slumped 28 percent to 28.9 million euros. The management explained this with "considerable excess capacity in software development". In response, salaries and the number of employees have been adjusted. Management then hopes to see positive effects from the measure in the second half of the year. "Nagarro is making great efforts to reduce its cost base," it added.

Stifel industry expert Adrian Pehl criticized in an initial assessment on Monday that management should have reacted much faster to the costs and initiated job cuts.

Already last Friday, the management had again lowered its targets for 2023 after the close of the stock exchange. Due to unfavorable currency developments and restraint in some projects, a profit of only about 915 million euros is expected. Nagarro had only lowered its sales expectations from more than one billion to 940 million euros in mid-May.

The company is targeting a gross margin of only 26 percent, two percentage points lower than previously. The Ebitda margin (earnings before interest, taxes, depreciation and amortization) is now expected to be 13 percent instead of 15 percent. All new forecasts are based on current exchange rates and do not take into account future acquisitions./ngu/mne/stk