Bottlenecks in the supply of steel and plastic Connection technology specialists Normamore pessimistic for 2021. The SDax group cut its profitability targets for the current year on Tuesday. However, sales should be as high as previously thought. The Norma share then went down steeply.
After the news, the paper lost twelve percent to an annual low of 37.74 euros. In the early afternoon, the price slide accelerated again, and at times it fell by more than 19 percent.
Just last week, the British investment bank HSBC upgraded Norma shares from “Hold” to “Buy” and raised the price target from EUR 48 to EUR 49. At the time, analyst Richard Schramm was still of the opinion that the Group’s targets for 2021 would still be achievable despite the gloomy prospects for the automotive business.
Bottlenecks lead to higher prices
But Norma cannot escape the difficult environment. Based on the adjusted earnings before interest and taxes (EBIT), the margin should now be more than 10 percent instead of more than 12 percent as previously assumed, it was now said. The margin forecast for adjusted earnings before interest, taxes and goodwill amortization (Ebita) was also reduced by two percentage points to more than eleven percent. Income from our own resources should continue to increase in the low double-digit percentage range in the current year.
The reason for the forecast lowering is a persistent shortage of materials, especially steel and plastic, it said. The bottlenecks led to higher prices. Therefore, the management now reckons with “significantly lower production capacities in relevant industries as well as higher material and freight costs in all regions”. Furthermore, expenses in connection with the corona pandemic burdened, it said.
Things went well in the second quarter
Most recently, thanks to a sustained recovery in the auto markets and good business in water management, Norma had recovered from the Corona slump from last year in the second quarter and increased sales and earnings significantly.
Already when the figures were presented at the beginning of August, the management around CEO Michael Schneider warned that the company had to deal with the increasing price pressure on the raw material markets and the supply bottlenecks in the semiconductor industry on a daily basis. Nevertheless, the management had declared at the time that we are looking confidently into the second half of 2021. (dpa-AFX / gem)
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