Solutions 30, a Luxembourg-based technical services firm, reported a 10.1% revenue decline in Q3, totaling 225.4 million euros, driven by poor performance in France and slowed fiber deployment in Belgium. The Benelux region saw an 8.3% drop, with France down 16.9%. Despite challenges, Germany’s revenue surged 33.2%. The company aims for improved profitability, targeting an adjusted EBITDA of 77 million euros. Analysts maintain a buy rating, anticipating potential recovery despite current stock struggles.
Solutions 30 Faces Revenue Challenges
The Luxembourg-based company, known for its expertise in technical services for new technologies, has reported a notable downturn in its revenues for the third quarter. This decline is primarily attributed to weakened performance in France and a slowdown in fiber deployment activities in Belgium.
In the latest quarter, Solutions 30 experienced a revenue contraction of 10.1%, totaling 225.4 million euros. This follows a prior decrease of 4.5% in the second quarter. On the Paris Stock Exchange, the adverse trends have led to significant sell-offs, with shares plummeting 5.4% by mid-afternoon, adding to a nearly 14% drop earlier in the day.
Challenges in the Benelux Region and Beyond
The company has faced particular difficulties in the Benelux region, which includes Belgium, the Netherlands, and Luxembourg—historically a growth driver for Solutions 30. Revenues in this critical area fell by 8.3% in the third quarter to 82.1 million euros. The decline in France, which saw a staggering 16.9% drop, was exacerbated by the cancellation of contracts deemed ‘insufficiently profitable.’ Solutions 30 has also withdrawn from certain contracts in Spain.
Belgium’s fiber deployment has been hindered by ongoing negotiations among telecommunications providers, which are delaying activities. The anticipated merger of two major clients, Proximus and Fiberklaar, is expected to further impact operations as the company navigates these complexities.
Despite these challenges, Solutions 30 reported a positive performance in Germany, where activity surged by 33.2% year-on-year, primarily driven by robust growth in the telecommunications sector. Poland also showed encouraging results, with a 24.2% increase in revenues.
Looking ahead, Solutions 30 aims to meet its revised targets set last July, despite a projected decline in overall revenue from the previous year’s 1.06 billion euros. Analysts have adjusted their forecasts, anticipating a decrease of 2% to 4% in revenues linked to the struggles in France.
The company remains committed to improving its profitability metrics, targeting an increase in adjusted EBITDA, with expectations of reaching 77 million euros, representing 7.6% of revenue.
In conclusion, while the road to recovery appears challenging, Solutions 30 is focused on achieving long-term goals, including an adjusted EBITDA margin exceeding 10% in its key markets by 2026 and tripling revenue in Germany. Although current stock performance reflects disappointment over growth projections, the potential for future upside remains, prompting analysts to maintain a buy rating on the stock with a slightly adjusted target price.