MUNICH (dpa-AFX) - IT service provider Nagarro increased sales in the second quarter, but earned significantly less due to a sharp rise in personnel costs with weak capacity utilization. Quarterly sales rose 8 percent to 226.8 million euros, the SDax-listed company announced in Munich on Monday. However, earnings before interest, taxes, depreciation and amortization (Ebitda) adjusted for special items slumped 28 percent to 28.9 million euros. Management attributed this to "considerable excess capacity in software development." In response, salaries and the number of employees have been adjusted. The management then hopes for positive effects from the measure in the second half of the year.

Last Friday, the management had already lowered its targets for 2023 again after the close of the stock exchange. Due to unfavorable currency developments and restraint in some projects, a profit of only about 915 million euros is expected. Nagarro had only lowered its sales expectations from more than one billion to 940 million euros in mid-May.

The company is targeting a gross margin of only 26 percent, two percentage points lower than previously. The Ebitda margin (earnings before interest, taxes, depreciation and amortization) is now expected to be 13 percent instead of 15 percent. All new forecasts are based on current exchange rates and do not take into account future acquisitions./ngu/stk