Andritz AG, the world’s second-biggest maker of hydro-power turbines, fell the most in three months after second-quarter profit missed estimates and the company warned that full-year earnings will drop.
The stock slumped 7.9 percent to 39.095 euros, the biggest drop since May 2, making Graz, Austria-based Andritz the worst performer in the 298-company Euro Stoxx index today. Net income fell 27 percent to 42.8 million euros ($57 million) in the quarter through June, missing the average analyst estimate of 48.5 million euros, according to data compiled by Bloomberg.
“We expect investment activity in our key customer industries to remain subdued worldwide,” Chief Executive Officer Wolfgang Leitner said in a statement. Full-year net income “will be significantly lower than the last year,” the company said.
While Andritz’s consolidation of Schuler AG lifted revenue, the German metal company it acquired last year couldn’t make up for the group’s falling profitability. Decreased earnings in the company’s pulp and paper unit led the profit decline, Andritz said in a statement today.
“The margin decline is predominantly caused by severe margin erosion in the pulp and paper business,” Henning Breiter, an analyst at Hauck & Aufhaeuser, wrote in a note to clients. “We are concerned that the weaker P&P margins could stay below 6 percent given price pressure in the market.”
Andritz had warned on April 30 that profit would fall this year after cost overruns at a pulp mill being built in South America.