🎈 Up Big Today: Find today's biggest gainers (some over 50%!) with our free screenerTry Stock Screener

Lufthansa lowers profit forecast for 2024 – Shares under pressure

Published 07/12/2024, 08:44 PM
© Reuters.
LHAG
-
DLAKY
-

Investing.com - Deutsche Lufthansa (ETR:LHAG) lowered its profit forecast for the current year on Friday. This announcement triggered a significant reaction on the stock market: the stock initially plummeted to its lowest level since October 2022, but then recovered somewhat, last trading at €5.63, a decline of about 2.74%.

Lufthansa now expects an adjusted earnings before interest and taxes (EBIT) for 2024 between €1.4 billion and €1.8B. The airline had originally targeted about €2.2B.

The profit forecast is significantly dependent on the performance of Lufthansa Airlines and the traditionally important fourth quarter for Lufthansa Cargo, the airline stated.

Lufthansa must also revise its expectations for Adjusted Free Cash Flow, a key indicator of a company's financial health. Instead of the previously expected minimum of €1B, a "significantly" lower figure is now forecast.

Preliminary results for the second quarter of 2023 confirm the challenges Lufthansa currently faces. The Lufthansa Group achieved an adjusted EBIT of €686M, significantly less than the €1.1B in the same period of the previous year. Particularly, a market-driven decline in average revenues across all traffic areas, especially in Asia, impacted the result.

RBC analyst Ruairi Cullinane noted in a brief report that the second half of 2024 will now be crucial for Lufthansa. To reach the midpoint of the new forecast range, the airline would need to achieve an adjusted EBIT of around €1.76B, slightly below the €1.87B in the second half of 2023.

He further explained that Lufthansa's revised annual forecast, following similar warnings from Air France-KLM (EPA:AIRF) and Delta Airlines (NYSE:DAL), raises concerns for the entire aviation sector. Despite these challenges, the Canadian investment bank remains optimistic about the European aviation sector overall but points to more attractive opportunities in other areas of the sector. Cullinane rates Lufthansa stock as "Sector Perform" with a price target of €7.50.

Note: Start a new era of investing with InvestingPro and gain access to a comprehensive set of tools to improve your investment strategy:

  • ProPicks: Utilize AI-driven stock strategies with proven success. Over 100 stock recommendations are sent directly to your inbox every month.
  • ProTips: We translate complex financial data into short, understandable information so you always stay informed.
  • Professional Screener: Find the best stocks that match your criteria.
  • Comprehensive Financial Data: Explore detailed financial data for thousands of stocks and gain a decisive advantage.

And there's more! Look forward to additional innovative services that will further enhance your experience with InvestingPro.

Click on the link and use the discount code "PROTRADER" for an additional discount of up to 10% on our annual packages. Get it now!

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.