29.10.2008 | Austria

S&T again increases services sales in Q3

Optimistic outlook for the entire 2008 financial year

Despite the ongoing international financial crisis, the IT consultancy and service provider S&T has again successfully expanded its consulting and services business in the third quarter of 2008. In the Managed Services sector (outsourcing solutions), S&T showed an increase in sales of 23.2%, to 26.1 million Euro, for this period (Q1-Q3 2008: 73.3 million Euro, +21.0%). Sales figures for the Business Solutions Division (software solutions and SAP consulting) rose in the third quarter of 2008 by 1.3% to 39.9 million Euro, and increased in the first nine months of the year by 12.4% to 115.3 million Euro. Total sales increased in Q3 2008 by 1.7% to 124.9 million Euro, and increased from January to September 2008 by 3.1%, to 362.3 million Euro. The company is expecting sales of 510-520 million Euro and an EBIT of 11-12 million Euro for the whole year, thereby achieving numbers close to the record figures from 2007.
The contribution to S&T Group sales growth made by the service provision business (outsourcing, software and consulting) has increased over-proportionally and now accounts for 52% of total sales. The hardware-related Enterprise Services business achieved sales of 58.9 million Euro (-5.4%) in Q3 2008 and 173.7 million Euro (-7.8%) for the first nine months of the year. “Due to the financial crisis, some customers have postponed infrastructure orders, in particular those involving servers and storage equipment,” explains Christian Rosner, S&T CEO.
In the third quarter of 2008, the Group generated an EBITDA of 3.3 million Euro (-24.7%), January to September totalling 10.6 million Euro (-7.7%). The EBIT for Q3 was 1.4 million Euro (-44.4%) and was 5.0 million Euro (-17.1%) for the first nine months of the year. The gross margin was 40.5% in Q3 and 40.2% for the year to the end of September. Rosner: “The financial crisis unfortunately can’t fail to have some impact on S&T, but we have a stable business model with a considerable portion of our portfolio consisting of services and consulting, as well as mostly mid-term duration contracts and projects. In addition, IT is crucial for practically every company and is vital in particular when it comes to boosting cost and efficiency potentials. We are therefore currently expecting a good 2008 fourth quarter in our key business units“.

Adriatic Region and DACH grow, as does Asia

The Adriatic Region in particular performed exceptionally well in the third quarter of 2008. Double digit sales growth in this period was built on the basis of a significant contribution from Slovenia, where a number of large projects were carried out. The DACH Region (Germany, Austria, Switzerland) also achieved good sales growth in the third quarter, as well as in the first nine months of the year. The Asia Region also demonstrated double digit growth (although the absolute figures were relatively small) from January through September 2008, with business in the East and Central Regions holding steady. “Despite the unfavorable framework conditions, we have achieved a turnaround in Hungary, and the results in Turkey are now also positive. The political situations in Bulgaria and Ukraine have admittedly been a brake on growth, as have the commercial problems in the automotive and financial services sectors, and the financial crisis in Russia,” comments Rosner.

Share price no longer reflects the fundamental value of the business

The downwards pressure on stock markets has also dragged the S&T share price down to a level below that of the IPO price (which was 25.95 Euro) in 1998. “The current price in no way reflects the value of the company, but is purely and simply a result of the financial crisis and a certain degree of hysteria. In 1998, S&T had 239 employees in 7 countries and achieved sales of 30 million Euro. Today, we are represented in 22 countries by 3,100 employees and sales have increased by a factor of almost 20, in tandem with solid profitability. We are well financed by means of long-term secured external funds, and our wide-ranging portfolio of customers, services and products, together with our geographic spread, means that we are not dependent on individual sectors or customers,” comments Rosner.

2008 Outlook

Despite the prevailing economic climate, the S&T Group expects a good 2008 fourth quarter in the majority of its countries. For the whole year, the company expects total sales of 510-520 million Euro and an EBIT of 11-12 million Euro. Rosner: “We are assuming that we will again increase the gross margin for the whole year and that we will be able to continue on our path of solid success, despite the ongoing crunch. In 2009 we will focus on increasing profitability in all countries and business units.”
Corporate Communications
Tel.: +43 1 367 8088 1029