S&T: Best 3rd quarter ever
Sales doubles in Business Solutions
Total sales January to September 2007: 351.5 (+10.2%)
EBITDA Q3 2007: €4.4 million (+50.5%)
EBITDA January to September 2007: €11.4 million (-3.0%)
EBIT Q3 2007: €2.4 million (+62.3%)
EBIT January to September 2007: €6.1 million (-20.3%)
The S&T Group plans to double its business by 2010 and to generate more than 60% of its sales with IT consulting and solutions. The 2007 3rd quarter results bring the Group significantly closer to this strategic aim. Already almost half of the Q3 turnover (49.3%) comes from Business Solutions and Managed Services. The sales in Business Solutions alone doubled in the 3rd quarter of 2007 to €39.4 million. The Managed Services sector also made significant gains. With large outsourcing contracts, S&T achieved an increase in sales of 12.2%, with €21.2 million in the 3rd quarter. The sales in infrastructure business was €62.3 million in the 3rd quarter of 2007 and is therefore less than the previous year, as planned. In the 3rd quarter 2007, EBITDA rose by 50.5% compared to the previous year, to €4.4 million and EBIT rose by 62.3% to €2.4 million. “The 3rd quarter is usually difficult in our industry. However, it is clear that our strategy is effective. We have successfully pressed ahead with concentrating on the more profitable business, successively re-orienting our business mix and concentrating on our core markets. We are pleased with the 3rd quarter 2007”, says Christian Rosner, S&T CEO.
January to September 2007: 10.2% more salesS&T achieved total sales of €351.5 million in the first nine months of 2007, representing an increase of 10.2% compared to the same period in 2006. The Business Solutions area also performed outstandingly in this period, with sales of €102.5 million, representing growth of 57.1%. Turnover in the Managed Services business area rose by 12.7% to €60.6 million. Together, these two segments make up 46.4% of total sales. With infrastructure solutions (Enterprise Systems) S&T achieved sales of €188.4 million (-5.8%) from January to September 2007. Rosner: “Companies and institutions in Eastern European countries are slowly finishing building and upgrading their IT infrastructure and are applying themselves to new challenges, which explains the sales shift to consulting and solutions business and the boom in Nearshoring. We are also focussing increasingly on the more profitable projects in Enterprise Systems, which also require consulting and service.”
Success in IMG, new EU countries and South-East EuropeEBITDA for the first nine months of 2007 amounted to €11.4 million (-3.0%), matching the year-earlier level. EBIT posted a significant improvement, above all due to the record earnings generated in the third quarter. It totaled 6.1 million euros for the first nine months of 2007 (-20.3%), halving the restructuring-induced decline of -40.7% experienced in the first six months of 2007. “Over the summer months we were able to control and halt the large investments that influence results, such as the integration of IMG, taken over in the spring, and the restructuring in Russia, Hungary and Turkey. We could see that we are on the right track for the year,” explained Rosner. Besides IMG, which had a positive influence on results despite the integration expenses and the sale of IMG America, the new EU countries of Romania and Bulgaria also developed very well, as did the South-East European countries and also Ukraine, Poland and the Czech Republic. Austria has won several large Managed Service contracts and has also established itself on the SAP market. “S&T cross-border business has increased. Our clients in the DACH region use us as a springboard to Eastern Europe and are rolling out their international projects with us”, explains Rosner.
S&T share price up by 23.7%The S&T share price showed a very positive development in 2007 with double digit growth: +23.7% at the beginning of the year (share price €39.20) to a price of €51.38 on 22 October 2007. The share price remained stable even during the difficult market conditions in the summer. The market capitalisation of the enterprise also showed impressive growth, increasing from €139.9 million at the beginning of the year to €184,2 million by the end of October (22.10.2007).
Larger S&T teamThe number of employees at the S&T Group grew by 26% from the beginning of the year until the end of September 2007. The number initially increased from 2295 to 3000 with the takeover of IMG in April 2007. Around 100 additional new staff were employed in the months that followed. Rosner: “The competition for competent employees is becoming more severe even in Eastern Europe. Our focus on working with local management and local teams is in our favour, and the international challenges that we offer our employees make us a very attractive employer. This is important to us as we are always on the lookout for good people.” Just recently the renowned Romanian business magazine Capital named the best employers of the country – S&T topped the list of IT companies. IMG/S&T in turn was again awarded the BestPersAward, which is given annually to companies in Germany with sound, modern human resources practices, for the fifth time.
Numerous projects completed successfullyThe increase in the S&T IT consulting and solutions business is evidenced by the successfully completed projects in recent months. S&T Slovakia, for example, completed a SAP implementation for the Kosice water works with a contract value of €800 000. S&T Poland obtained an important Managed Serviced project with the takeover of Xerox customer services, while the Ukraine scored with the building of several modern computer centres for JSC Ukraine.
Group strategy consistently realisedThe S&T Group has consistently pressed ahead with implementing its strategy. The sale of IMG America in September emphasized their geographic focus on Central and Eastern Europe as well as on Asia. The planned expansion of business in China and Japan is expected to lead to a strengthening in this region. Skills expansion is also steaming ahead. S&T opened its sixth competence centre in September. The Cisco Security Competence Centre in Hungary focuses on developing security solutions for clients from all S&T countries. Last but not least, IMG/S&T received two Special Expertise Partner awards from SAP - one in the area of insurance, the other in the area of SAP for Retail. “We see the financial services sector as particularly promising, as we have excellent industry experts and long-term experience in numerous projects. Furthermore, the IT challenges for banks and insurance companies are as great as always,” says Rosner.
Outlook for 2007For the 2007 financial year S&T expects an increase in total sales to €510-520 million and an increase in EBIT to €13-15 million. “Traditionally, the fourth quarter is always the strongest of the whole year. Currently it looks like 2007 will follow this trend. Many clients want to spend their budgets by the end of the year, so our project pipeline is well stocked”, explains Rosner.