BIRKENFELD (dpa-AFX) - Falling demand from its customers continues to hit diagnostics specialist Stratec hard. The first half of the year was weaker than feared, and management is therefore further lowering its already cautious sales and profit forecast. Although the Group promises some improvement for the second half of the year, the new targets are worse than analysts had previously expected. There were therefore long faces on the stock exchange on Wednesday morning. The share, which is listed on the SDax, slumped sharply in the morning.

In the morning, the stock temporarily fell by a good 17 percent to a low since March 2020. That was exactly when the stock started to soar, because Stratec's products were highly sought after during the pandemic. But this is now a thing of the past. The high of 147.40 euros in late summer 2021 is miles away, and a share now costs just over a third. Following an almost unbroken downward trend in 2022, the share has already lost considerable ground this year - since the turn of the year, the loss has now totaled almost 37 percent.

Analysts were disappointed at midweek. Berenberg expert Odysseas Manesiotis spoke of a "weak first half" and assumes that market expectations for earnings per share for 2023 are now likely to fall by around one fifth.

According to Stratec's preliminary calculations, total group earnings in the first half of the year were down 8.9 percent year-on-year to 125 million euros. Overall, the results for the first half of the year were slightly below the company's own expectations, the company said in a statement on Tuesday evening.

Jan Koch, an analyst at Deutsche Bank, said the second quarter was significantly worse than he had expected. Despite a slight increase of 16 percent, sales were below his expectations, he said. The operating result was even worse, falling by almost half - the figure was 64 percent below his own forecasts.

Stratec management cited numerous reasons for the weak development and the reduction in targets. For example, demand is falling for precisely those Stratec laboratory solutions in in vitro diagnostics that had experienced a significant upswing during the Corona pandemic due to the many Covid tests. Many customers were now reducing their inventories. Laboratories supplied by Stratec were also currently running at lower capacity and therefore needed fewer spare parts than initially thought. Although ordering behavior initially recovered somewhat at the beginning of the year, orders and order forecasts for the second half of the year have recently fallen significantly again.

According to the new forecast, sales adjusted for currency effects this year should merely stagnate at the previous year's level of just under 275 million euros or at most increase slightly, with the acquisition of the US company Natech Plastics, completed on July 1, also contributing. Previously, management had assumed sales growth of eight to twelve percent for 2023, excluding Natech and exchange rate effects. Market expectations had previously been at least at the lower end of the range.

For the full year, the Group also reduced its targets for adjusted operating margin, measured as earnings before interest and taxes (Ebit) in relation to sales. Reduced by two percentage points each at the upper and lower end, Stratec now only expects a range of ten to twelve percent. In the first half of the year, the margin had fallen from 15.4 to 5.6 percent. However, price increases, greater cost discipline in purchasing and the savings program already announced in the spring should help to improve profitability again, at least gradually, in the second half of the year. Nevertheless, customer order behavior is likely to continue to fluctuate strongly, according to Stratec.

Among other things, declining business with diagnostic solutions for veterinary medicine recently caused problems for Stratec. In this context, the Group referred to delivery backlogs at one customer, which had resulted from unexpected delays in the transfer of a new system to series production.

In addition, one customer had terminated a system at an advanced stage - a step which, in the view of management, was not in conformity with the contract. Here, the Group's management firmly expects a compensation package - but this has not yet been negotiated and is therefore not included in the plans for 2023.

Stratec plans to present final figures on August 9./tav/mne/stk