French animation studio Xilam fell sharply on the stock market this Friday in the wake of lower half-year results, deemed disappointing by analysts as a consequence of its heavy investments.

The content creator behind franchises such as 'Oggy et les cafards' and 'Zig & Sharko', reported last night current operating income of 2.2 million euros for the first half, compared with 4.8 million euros a year earlier.

Its operating margin before non-recurring items fell to 10.5%, compared with 27.1% for the first half of fiscal 2022.

Despite this, sales rose sharply, by 28% to 18.1 million euros, thanks to the success of its positioning in the buoyant adult production market.

In its press release, Xilam explains the drop in its results by strategic investments aimed at preparing for future growth, particularly in the buoyant adult segment.

These are mainly structural investments (IT, talent, management) needed to increase production capacity and move upmarket.

The studio, which estimates that its fixed costs should have risen by 20% between 2021 and 2023, specifies that it plans to invest around 40 million euros this year, up sharply on 2022 (36.3 million).

Following this publication, Euroland's analysts indicate that they have significantly lowered their target price for the share, from 42 to 30 euros.

Our positive view of the stock has not yet been dented, but we do regret the lack of anticipation and leadership on the part of management, even though we understand the complexity and volatility inherent in Xilam's business model', they explain.

Since the beginning of the year, Xilam shares have lost almost 59% of their value on the stock market.

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