Bechtle shares drop after weak Q3 results and guidance withdrawal

Investing.com -- Shares of Bechtle AG (ETR:BC8G ) fell on Tuesday after the company reported preliminary results for the third quarter, which showed a disappointing performance and led to the withdrawal of its previously lowered guidance for the year. 

At 8:10 am (1210 GMT), Bechtle AG was trading 6.7% lower at €33.780.

The company said these challenges were due to persistent market uncertainties and diminished demand from small and medium-sized business clients.

In its preliminary report, Bechtle reported revenues of €1.51 billion for the third quarter, reflecting a modest increase of just 2% year-over-year. 

This figure was only slightly above the consensus estimate of €1.48 billion, indicating a lackluster performance that fell short of expectations. 

Analysts at Jefferies remarked that the underwhelming quarter-end performance contributed to this muted growth, which mirrors broader macroeconomic concerns that have persisted throughout the quarter.

Bechtle's earnings before taxes fell by 17% year-over-year to €78 million, which was 10% below analysts' expectations despite relatively stable revenue figures. 

EBT margin fell to 5.2%, compared to 6.3% in the same quarter last year, reflecting a weaker product mix as well as fixed cost challenges.

“Even though mgmt remains optimistic to see an improvement in 4Q, we consider the withdrawn guidance as a sign that main moving parts, the anticipated budget flush from public clients and volume-based bonuses are not materializing to the extent expected,” said analysts at Jefferies.

Bechtle had previously indicated that it expected business volume, revenue, earnings, and EBT margin to remain on par with the prior year. 

While management expressed cautious optimism regarding potential improvements in the fourth quarter, their withdrawal of guidance casts a  doubt on those expectations. 

Source: Investing.com