AHRENSBURG (dpa-AFX) - Image processing specialist Basler expects a significant drop in sales as a result of cooled demand. Now savings are to be made. In the current year, sales are expected to be only between €235 million and €265 million, as the company announced in Ahrensburg on Wednesday evening. That would be both less than in the previous year and less than expected by analysts. Of this, only five to eight percent should remain with Basler as pre-tax earnings (EBT). The share, which is listed in the SDax, saw a double-digit decline on the stock exchange - even the confirmation of the medium-term targets could not change this.

In order to be able to meet the return target at all, Basler has prescribed itself a savings program. Investments are to be approached restrictively and material costs are to be put to the test. New hirings have been stopped for the time being, while part of the German workforce will have to adjust to shorter working hours. In addition, the variable compensation of Executive Board members is to be paused. The Executive Board is proposing a dividend of 14 cents per share for the year just ended. Industry experts had expected a good third more.

The news was met with selling on the stock market. The share plummeted by up to 18 percent to 22.10 euros, its lowest level since September 2022. According to Thibauld Morel of investment house Bryan Garnier, the forecast is well below expectations, as the market had expected revenues to rise rather than fall. The operating profit target is also clearly below expectations, he added. However, Morel also pointed out that management has been increasingly cautious about business performance for some time now.

With the current drop in the share price, Basler shares are continuing a series of losses that has been ongoing since mid-January. Since the interim high reached at the time, the market capitalization of the company, which has been listed on the stock exchange since 1999, has fallen more than 40 percent to around 700 million euros. From its previous record price of just over 58 euros in November 2021, it has fallen by as much as 60 percent. At that time, things were still going better for the Group, with profits rising significantly in 2021. But then the outlook steadily darkened. Already the outlook for 2022 was disappointing. And now Basler did not satisfy the market with its targets for the current year either.

Jefferies analyst Martin Comtesse found fault with the group's targets and spoke of a disappointment on both the sales and the profit side. The weak order momentum apparently continues, for which the expert blames delays in the semiconductor and consumer electronics industries in Asia and the USA. The order backlog at Basler is now likely to decrease in the coming weeks, Comtesse believes. Therefore, the most important question for him at the moment is "how strong the order momentum will pick up in the second half of the year".

According to Bryan Garnier expert Morel, Basler is currently also struggling with the strong fluctuations in the important Chinese market, where local competition is increasing. The analyst also does not necessarily consider the outlook beyond the current year to be secure: for the group to actually meet its confirmed medium-term sales targets until 2025, the market would have to pick up speed again in the second half of the year and steadily increase at a normalized growth rate in the following years, Morel said.

Basler had already been cautious about the current year when it presented its key figures for last year. "The persistently weak level of incoming orders in the first weeks of the year makes management rather cautious about the course of the year," the company had said at the time. On the other hand, it said, the order backlog remained at an elevated level, even though incoming orders had already declined last year.

Last year, the Basler group increased its sales by more than a quarter to 272 million euros. However, demand flattened out over the course of the year and incoming orders fell by 23 percent to 248.4 million euros. By contrast, due to increased material costs and expenses for the planned expansion of the business, pre-tax profit remained at the previous year's level of around 28 million euros. The pre-tax return on sales therefore fell by 2.6 percentage points to 10.4 percent.

In the medium term, Group President Dietmar Ley believes the company is still well positioned to grow profitably. After the dip in the current year, sales are expected to increase by at least 15 percent on average. By 2025, sales should then rise to 400 million euros. The margin based on pre-tax profit is expected to rise again to twelve percent./ngu/tav/zb/jkr/mis