STÜHLINGEN (dpa-AFX) - Insulation materials and paints manufacturer Sto reported lower sales in the first quarter, as expected, due to bad weather. The gross profit margin also did not develop as well as hoped, even though it improved compared to the previous year. Sales fell by just under two percent to around 362 million euros, the SDax-listed company announced surprisingly on Wednesday in Stühlingen, thereby specifying the information from mid-April. When Sto presented its annual figures at that time, it had already announced that earnings had been lower due to low temperatures and high precipitation in the first quarter.

The gross profit margin - that is, the proportion of sales that remains after deducting all manufacturing and material costs - had risen by 0.9 percentage points to 50.6 percent. However, this was less than expected. As usual for the first quarter, the bottom line was in the red, which the company declined to specify. Wednesday's statement simply said, "Due to the pronounced seasonality of its business activities, Sto does not usually generate a positive consolidated result in the first months of a year."

In April, earnings remained below the previous year's level and expectations. The unfavorable weather conditions in many countries in which Sto operates continue to be mainly responsible for this. "Sto intends to at least offset the current and past burdens from procurement in the previous year through further sales price increases of its own over the course of the year," the statement continued. Despite the weak start to the year, the company confirmed its sales and earnings forecast for the current year.

Excluding the impact from the further course of the Russia-Ukraine conflict, Sto reportedly continues to expect positive business development in 2023. Despite the major challenges, the company continues to expect sales to increase by seven percent to 1.91 billion euros. For earnings before interest and taxes (Ebit), Sto is targeting a range of 118 million euros to 143 million euros, up from just under 130 million euros last year.

"The preconditions for the forecast are an average weather pattern and economic development in line with original expectations in the most important regions," the statement said. In addition, it said the forecast is based on the assumptions that the euro exchange rate will remain largely stable and that the Russia-Ukraine conflict will not lead to any significant impairment of demand in the markets relevant to Sto. In addition, there are unlikely to be any restrictions on business activities or the supply of raw materials, purchased products, and energy.

On the stock exchange, the key data for the first quarter and the confirmed forecast caused profit-taking. The share, which had recently performed well, slipped slightly into negative territory after the announcement was published, having reached a high for the year of 191.60 euros in early trading. The stock has been on a rollercoaster ride. After years of hovering around the 100 euro mark, it climbed from around 75 euros to a record high of 260 euros at the beginning of 2022 following the crash at the start of the Corona pandemic in spring 2020.

In the months that followed, it crashed to just over 112 euros in October last year. Since then, the share price has been climbing again. At its current level, the company is valued at around 1.3 billion euros, placing it in the midfield of the small-cap index SDax, where it has been listed for just over a year and a half./zb/knd/he