The performance of the SodaStream International Ltd. (Nasdaq: SODA) share, which has plunged 40% this year, highlights how well the capital market is usually able to anticipate what will happen. SodaStream, which develops home carbonation systems, published its second quarter results today. Some expressed satisfaction, but not Wall Street, which cares only for the future, i.e. the company forecast for the coming year, and naught for the past.
This is where SodaStream was a disappointment. The company now expects its revenue to grow only 5% this year, compared with a 15% growth forecast a quarter ago. The company grew 29% in 2013 and 51% in 2012.
This backpedaling in revenue is directly translatable to the company's bottom line. EBITDA (profit before financing expenses, tax, depreciation, and amortization) is now expected to increase by only 5% this year, compared with the previous 11% forecast, and by 17%, excluding the effects of the exchange rate, compared with the previous 25% forecast.
Even worse is net profit, where SodaStream is predicting a 5% drop this year, compared with the previous forecast of a 3% increase. Following the steep drop in its share price, SodaStream's current market cap is $624 million.
"US sales continue to suffer from the effect of high inventory levels left over from the 2013 holidays and from slow demand for the company's machines," SodaStream CEO Daniel Birnbaum said, telling the market what it knew a long time ago. He said that the company was taking the necessary steps to save on costs in order to safeguard its profits.
SodaStream's second quarter revenue was up $141.2 million, slightly above the $140.6 million consensus forecast, and representing 6.6% annual growth. Company revenue from the US market was off 14%, a significant indication that the company's main growth market has now lost that status. Company revenue from central Europe, the Middle East, and Africa, on the other hand, soared 71%.
The company's net profit per share was $0.43, compared with the analysts' consensus of $0.31. This good news, however, was overshadowed by the lowering of the company's forecasts for the rest of the year.
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2014
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