MAINTAL (dpa-AFX) - Joining technology specialist Norma Group has started the year with a significant drop in profits due to higher costs. "We successfully passed on price increases on the materials side and grew in what continues to be a challenging environment," company CEO Miguel Ángel López Borrego said Tuesday. However, he added, Norma's performance in this first quarter is not yet at the level the board has set for 2023. Therefore, he wants to further improve internal processes to make the company more efficient overall and take advantage of growth opportunities. Profitability will increase over the course of the year, it added. But on the stock market, the news went down badly.

Norma shares lost more than seven percent of their value at times in the morning, but then recovered a good deal. Most recently, it was still one of the biggest losers in the SDax small cap index, with a discount of almost two percent. For 2023, however, there is still a plus of a good fifth on the price list, after the share had lost around half of its value in 2022.

Several stock traders spoke of slightly missed expectations with regard to the key data of the automotive and industrial supplier. While sales and adjusted operating profit were only marginally behind analysts' average estimates, "that doesn't help," one of them said.

To make the company more profitable, the board is launching an efficiency and growth program. For example, it wants to boost growth in the water management and industrial applications sectors by winning stable business, the company said Tuesday in Maintal. In the Mobility and New Energies sectors, the Executive Board intends to take an even more focused and selective approach in this regard. Decisions on long-term investments are therefore to be made increasingly by the individual strategic business units in the future.

Possible takeover targets are also to be analyzed continuously, it said. Among other things, the management wants to complement the water business in Europe. In addition, business processes are to be further improved, for example through standardized IT systems. Complexity in the supply and logistics chain was reduced, for example, by expanding direct deliveries to customers and simultaneously reducing inventories.

In the first quarter, adjusted earnings before interest and taxes (EBIT) fell by around a quarter year-on-year to 22.6 million euros. The company attributed this mainly to higher labor costs and additional expenses for extra shifts, temporary workers and special freight in order to process and deliver backlogged customer orders.

Sales climbed by three and a half percent to 315 million euros, mainly thanks to higher selling prices. The company grew by just over two percent under its own steam. However, net income fell by more than half to 7.8 million euros. In the meantime, the Management Board is sticking to its targets for the year. Accordingly, sales are expected to grow by a mid-single-digit percentage on the basis of organic growth. The adjusted profit margin before interest and taxes is expected to reach around eight percent in the current year./mne/stw/stk