Mobilezone shocks investors with profit warning
Published: Friday, Dec 13th 2024, 13:50
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Mobilezone has shocked the markets with a profit warning. The company's German business in particular had a negative impact on its balance sheet. The company now wants to take countermeasures with restructuring and job cuts.
Mobilezone has withdrawn its financial targets for 2024. Specifically, the company expects sales to fall to between CHF 960 and 990 million in the current year, compared to just over CHF 1 billion in the previous year.
However, the biggest setback is in adjusted operating profit (EBIT). Here, the Group expects only CHF 52 to 57 million, after previously forecasting CHF 68 to 75 million. In the previous year, Mobilezone had still achieved an operating profit of 65.7 million francs. In addition to the poor business in Germany, a number of one-off effects, including write-downs, are to blame for the dip.
Mobilezone's profit warning went down badly on the stock market. The share price plummeted. At midday, the shares were down by almost 15 percent. Mobilezone shares have thus wiped out all of their gains this year and are trading over 10 percent lower than at the end of 2023.
For analysts, the write-downs were surprisingly high. It is also not surprising that Mobilezone has suspended its EBIT margin target for 2025. At 8 percent, this was far too ambitious, wrote a ZKB analyst.
German business weakens
The weaker business in Germany in particular forced the company to adjust its expectations. Strong competition, particularly in the online business, has put margins under significant pressure.
In some cases, the company even had to make losses. "Margins are the problem, not volumes," said Markus Bernhard, Executive Delegate of the Mobilezone Board of Directors, during a conference call.
The hoped-for boost from the launch of the new iPhone also failed to materialize, added Mobilezone Germany CEO Wilke Stroman. The already low margin in Germany is therefore likely to fall to between 3.1 and 3.3 percent from 4.2 percent in the previous year.
Mobilzone also expects a decline in sales of just under 10% in the contract business and 5% in the accessories business in Switzerland. However, the previous year was also exceptionally strong, the company said. By contrast, the EBIT margin is expected to rise to around 12.5 percent after 11.7 percent in the previous year.
Aiming to improve margins in Germany
Mobilezone intends to increase margins in Germany again with numerous measures. To this end, the company has already initiated restructuring measures, which also include a reduction in personnel. In addition, divisions are to be merged and the organization streamlined. The company's management did not comment on the extent of the job cuts.
In addition, the focus in Germany is to be placed more strongly on business as a virtual mobile network operator (MVNO) in future. And better margins are to be achieved in upcoming contract renegotiations. Mobilezone no longer wants to make losses. To this end, it will also forego certain business, Bernhard emphasized further.
Dividend remains stable
However, it will only be possible to say in a few months' time whether the measures will have the desired effect. A financial forecast for 2025 will therefore only be possible when the business figures are published next March, Bernhard continued.
Nevertheless, the Board of Directors intends to keep the dividend stable at CHF 0.90 per share, in line with its announcement at the beginning of the year. "The company has a strong, resilient business model and a portfolio that has been highly diversified over the past few years," said Bernhard, explaining the decision.
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