Shares of Burckhardt Compression (SIX:BCHN) fell about 10% on Thursday following an update from the company that pushed back previously stated financial targets and revealed a substantial decline in orders.
The Swiss manufacturer, which supplies compressor systems to the oil and gas sector, reported that full-year order intake fell by 32% year over year. Alongside that decline, management said it will pursue sales of 1.2 billion Swiss francs and an operating profit margin in the 12% to 15% range - but the timeline to reach those targets has been delayed.
Company executives attributed the postponement of the targets to operational disruption and currency effects, specifically pointing to a stronger Swiss franc as a factor that has affected the timeline for achieving the sales and margin objectives.
Investors responded swiftly to the update, pricing in the revised timeline and weaker order flow by selling the stock. The drop in the share price came immediately after the company disclosed the order intake decline and the adjustment to its target timetable.
While Burckhardt Compression reiterated the numerical ambitions of 1.2 billion Swiss francs in sales and a 12% to 15% EBIT margin, the company made clear that those outcomes will now be expected over the coming years rather than on the previously anticipated schedule.
Contextual details
- The company produces compressor systems primarily for customers in the oil and gas industry.
- Full-year order intake decreased by 32% compared with the prior period.
- Management cited business disruption and a stronger Swiss franc as reasons for delaying its targets.
Market reaction
Following the announcement, the stock moved lower by approximately 10% as investors re-priced expectations around growth and margins in light of weaker orders and the extended timeline for target achievement.
At the same time, the company's stated financial ambition remains at sales of 1.2 billion Swiss francs and an EBIT margin of 12% to 15%, but management emphasized that external and internal factors have altered the pace at which those figures can be reached.
What is known and what remains limited
The firm provided the magnitude of the decline in order intake and restated the quantitative sales and margin targets. It identified business disruption and currency strength as causes for the delay. The company did not provide a revised specific date for when the targets will be achieved beyond saying they are expected over the coming years.