Investing.com -- Shares of SEB SA (EPA:SEBF) fell more than 7% on Thursday after the company reported a sharp drop in profit for 2024, weighed down by higher expenses, rising debt, and a regulatory fine.
Net profit attributable to shareholders plunged to €232 million, down from €386 million in 2023, largely due to a €189.5 million fine imposed by the French Competition Authority. SEB SA is appealing the decision, but the provision had a major impact on earnings.
Operating profit declined 19% to €540 million, from €667 million last year, reflecting weaker margins and a rise in financial costs, which jumped to €120 million from €81 million due to refinancing activities.
Meanwhile, the company’s effective tax rate rose to 32.7% from 25.1%, further squeezing net profit.
Despite reporting 3.2% revenue growth to €8.27 billion, SEB SA faced higher expenses, which climbed to €7.46 billion from €7.28 billion, eroding profitability.
Free cash flow also dropped sharply to €260 million, compared to €805 million in 2023, raising concerns over cash generation. Additionally, net debt rose to €1.93 billion from €1.77 billion, indicating increased leverage.
The company’s consumer division performed well, with 6% organic growth, particularly in Western Europe and North America.
However, its professional segment struggled, with a 4.5% decline, following an exceptionally strong 2023.
Despite the drop in profit, SEB SA raised its proposed dividend to €2.80 per share, up from €2.62.