(News Bulletin 247) – The consulting firm specializing in business transformation lowers its objectives for the 2024-2025 financial year, citing difficult market conditions and a lack of visibility on its activity.

Wavestone takes the wave this Thursday on the Paris Stock Exchange, sanctioned for having lowered its 2024-2025 objectives following half-year results below expectations. The consulting firm specializing in business transformation saw its stock fall by 8.4% to 40.40 euros this Thursday, around 11:50 a.m.

Between April and September (which corresponds to the first half of the year for the company, whose staggered financial year ends at the end of March), Wavestone revealed recurring operating income up 26% to 46.4 million euros, for a turnover of 457.8 million euros, up 2% like-for-like over the period. This level, however, is clearly below the expectations of TP ICAP Midcap, which expected 54.9 million euros in recurring operating profit.

As for the margin, it fell significantly, by 3.2 percentage points (3.2%) to 10.1% compared to 13.3% in the first half of 2023-2024, which did not include the two acquisitions. of the German group Q_Perior and the American Aspirant. “Q_Perior alone impacts the margin of around 2 points to which are added the costs linked to the integration and internal communication program”, notes TP ICAP Midcap.

“The profitability of the first half of 2024-2025 was impacted by the usual seasonality of the firm and by the costs linked to the integration program between Wavestone and Q_Perior, in particular the ‘Together as One’ event which was held in May 2024 at Paris,” reports Wavestone. A little further down in the accounts, net profit increased by 19% to 27.2 million euros.

A message of caution for the future

For the second part of the financial year, Wavestone does not foresee any rebound in its activity. The company continues to see a weakness in demand for consultancy, with clients remaining wait-and-see in launching new investments and incurring consultancy expenses, against a backdrop of increased competition.

“The banking and industrial sectors – in particular the automobile industry, retail, and, in France, the public sector, remain under pressure. Since the summer, luxury has in turn experienced a slowdown in demand for advice,” continues Wavestone.

In addition, the group concedes that it lacks visibility over the fourth quarter of 2024/2025 – i.e. the period covering January to March 2025 – which could lead to slower activity at the start of the 2025 calendar year.

“In the absence of signs of economic recovery in Europe, companies’ investment budgets are expected to remain under pressure in the short term, despite the easing of interest rates,” says the group. Wavestone also reports increasing pressure on prices.

Lowered annual targets

Wavestone therefore notes a deterioration in market conditions, leading it to today lower its annual objectives. The group specializing in consulting is now counting on stability in its turnover at 944 million euros while it initially anticipated an increase in its income of between 3% and 5%. The recurring operating margin objective is also lowered to 12.5%, compared to more than 13% initially. These objectives are at constant exchange rates and exclude new acquisitions.

This adjustment of objectives is only half a surprise. The group had paved the way for a downward revision of its annual ambitions alongside the publication of its half-yearly activity update at the end of October. The group was already reporting more difficult market conditions than anticipated at the start of the financial year.

But the scale of this revision took analysts, such as Jean-Pierre Tabart of TP ICAP Midcap, by surprise. This new target indicated by the consulting specialist induces “a second half of the year in slight decline”, he says.