Ceconomy: No Dividend Again

Last Updated: 20. Dezember 2023By

If you have recently taken a look at the Ceconomy stock, you will have found a rather volatile security. Sometimes Ceconomy holds the red lantern in the Small Cap Index SDAX, sometimes it goes up almost ten digits.

But what’s behind the fluctuations of the parent company of Media Markt and Saturn? I will summarize the recent developments for you below and show you how best to react to them.

Dividend falls out Trigger for the stock price declines was that Ceconomy announced that it will not pay a dividend for the 2022/23 financial year (which ended on 30.09.2023). The company was also not capable of doing so, since it had a loss of 39 million euros in the past financial year.

The cause of the loss was a write-down on the French stake Fnac Darty, negative effects from the sale of the Sweden and Portugal business and restructuring costs.

Predominantly one-off effects However, the operational development was not as dire as the earnings situation suggests. Sales rose by 4.7 percent to 22.2 billion euros and the adjusted EBIT increased from 208 to 243 million euros. The burdens only came below the operating result – and had mainly one-time character.

The Executive Board also sees it this way, which is very confident about the future and has promised operational improvements and a slight increase in sales for the 2023/24 financial year. The focus is on the DACH region as well as Western and Southern Europe. The online share of total sales is also to be increased to 30 percent in the next three years.

Justified confidence The confidence is based not least on the fact that the electronics retailer has gradually clarified the complex ownership structure, which has paralyzed the company in recent years and caused discrepancies.

The challenges from the Corona crisis and inflation (which also does not particularly promote consumer buying power) also seem to be under control. This can be attributed to the current CEO Karsten Wildberger, who has turned the company upside down.

Stock is cheap Despite these successes, it is astonishing how low Ceconomy is valued on the stock exchange. With sales of 22 billion euros, the market capitalization is only around 1.1 billion euros. The price-earnings ratio based on the profit estimates for the coming year is only 8.0.

When you know that the major shareholder Haniel has been dissatisfied with the poor share price performance for a long time and he is looking for new capital providers, possibly from China, the share price could turn up again next year. Fundamentally, higher prices would be justified.