S&T Service Business Grows 20% in 1st half year 2008

Despite market weakness sales growth and rise in results

(PresseBox) ( Vienna, )
- Total sales: 1st half year 2008: 237.4m euros (+4%)
- EBITDA: 1st half year 2008: 7.3m euros (+2.8%)
- EBIT: 1st half year 2008: 3.7m euros (+1.4%)
- Gross Margin over 40% (+18%)
- Services sales: 1st half year 2008: 122.6m euros (+19.5%)
- Outlook for 2nd half year still optimistic

The S&T Group also closed the 1st half of 2008 on a positive note. Total sales rose 4% to 237.4m euros, a new record high. EBIT for the IT consulting and services provider saw a slight gain of 1.4% to 3.7m euros, despite expenses for individual project restructuring operations, while EBITDA grew 2.8% to 7.3m euros. Sales in the consulting and services business developed particularly well. S&T generated 19,3% more sales in the Business Solutions division than in the same period in 2007, while the Managed Services division reported a 20% rise in pure organic growth. These two business areas contribute more than half of total sales. The outlook for the full 2008 financial year will finally be refined when figures for Q3 are available - the company continues though to expect the usual strong performance in the second half of the year.

The successful expansion of the consulting and services business areas at S&T continues. In the first half of 2008, S&T reported sales of 75.4m euros in the Business Solutions area - 19.3% more than the 63.2m euros reported for the same period in the previous year. Sales of 47.2m euros were generated from large, long term Managed Services contracts with customers such as OMV, the Spar retail chain and ISS Facility Management. This represents an increase of 20% compared with the 39.4m euros generated in the 1st half of 2007. The Enterprise Systems division, through which S&T provides IT infrastructure solutions, recorded a decline of -9% to 114.8m euros compared with 126.1m euros in 2007. The weak US dollar and local currency fluctuations led to further erosion of weakening prices in this area of the business, but it was possible to improve margins. In addition, sales were affected by the prevailing economic conditions causing customers to defer investments. "S&T remains successfully on target. Despite difficult market conditions we have achieved a new sales record and continued our strategy of strengthening our consulting and services business. Our total gross margin also developed very well, rising by 18% compared to the previous year to over 40%", commented Christian Rosner, CEO S&T.

S&T regions profitable

All S&T regions performed well in the 1st half of 2008. After integrating most of IMG, which was acquired in early 2007, the DACH region made progress - especially in Q2. The DACH region exceeded the previous year's half year sales and continued its progress to meeting planned earnings targets. In the Central region, Poland and the Czech Republic also exceeded sales levels achieved in the previous year. In addition, the restructuring in Hungary is taking effect and should be completed in the 2nd half of the year. Serbia and Croatia have made excellent progress, while Slovenia, Bosnia and Montenegro also delivered good results. On the whole, the Adriatic region reported a good 1st six months in 2008. The months from January to June were also profitable for the East region, where Bulgaria and Romania continued their successful run. Refocusing in Turkey was completed during the first half of the year, which led to a marked improvement in results, and should contribute to an improvement in operating income in the 2nd half of 2008. The Asia region ended the 1st half year very profitably despite relatively low volumes. "Over the past few months we have begun to notice the effects of a deficit in professional IT expertise. Specialist consultants and technology experts are harder to come by than ever before - particularly at a reasonable price. Salaries in Eastern Europe continue to rise quickly. Fortunately this is largely compensated for by higher market prices for services," said Rosner.

Q2 2008: Managed Services on the rise

S&T reported total sales of 120.8m euros in Q2 2008, with consulting and services contributing 54% of this result. EBIT for the 2nd quarter of 2008 was 1.4m euros and EBITDA was 3.2m euros. With a rise of 22% to 24.3m euros, the Managed Services division recorded the highest growth in sales. Business Solutions brought in 40.8m euros and Enterprise Systems contributed 55.8m euros.

10 year anniversary of IPO

On July 16th the S&T Group celebrated the 10th anniversary of its listing on the stock exchange. Despite positive business development, the share price was not able to escape the negative market trends in the 1st half year of 2008. At the end of June 2008 the share price was 31.72 euros.

S&T retains role of market consolidator

The S&T Group will continue to maintain its role as a market consolidator. The company plans to drive future growth through not just organic growth, but also by means of targeted acquisitions in the 2nd half year of 2008. Rosner: "At the moment we have our eye on several interesting potential acquisitions. These would primarily support our strategic goals for the Business Solutions and Managed Services divisions. We are a stable and forward-thinking partner for our customers, who can depend on our support for their long term projects."
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