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S&T: Third Quarter Results 2009
Positive EBIT and a confident forecast for Q4
"The full effects of our restructuring became clearly evident in the last quarter. Despite the costs for the ongoing re-organizational measures, we were still able to increase our EBIT slightly," comments Christian Rosner, CEO S&T AG, with regard to developments during recent months. In Q3 2009, the business recorded EBIT of 0.14 million euros. Compared to the same period in the previous year, staff costs had to be reduced by almost 20 % and other operating expenses by even 25 % in order to adapt to the prevailing market conditions.
The latest sales figures are as follows: sales of 92.1 million euros during Q3 2009 equate to a decrease of almost 25 percent (122.7 million euros in Q3 2008). Sales during the first 9 months of 2009 reached 283.1 million euros, 19.9 % less than the figure for the same period in 2008 (353.5 million euros). These figures for the S&T Group are in line with this year's over-all trend in the IT sector in the German speaking region and CEE countries.
Different results in the individual fields of business and national markets
Due to its long-term service contracts, Managed Services (MS) has demonstrated stable development - sales in this area remained constant in Q3 at 25.7 million euros. The fields of Business Solutions (BS) and Enterprise Systems (ES) have again been affected by the recession in Q3 2009 and have each suffered declines in demand of around 30 % (ES) and 32 % (BS), although the earnings trend in the ES and MS was very positive in many countries under the economic circumstances.
In addition to the decline in demand in some areas, the group's sales figures have also been affected by the macro-economic conditions in Central and Eastern European countries, and in particular through the weak exchange rates experienced by local currencies against the euro (between 6 and 20 % in Poland and Romania, for example). Restructuring in Japan is also going to affect figures for the last quarter 2009, although positive results are expected again in Japan by Q1 2010.
In China S&T is currently preparing the disposal of the majority stake of its subsidiary. Through a joint-venture the company will keep its presence in the Chinese market. The Japanese subsidiary will in the future, therefore, take over the hub function for the whole of Asia, with the focus of S&T's activities in Asia clearly on the execution of international projects for European clients.
Long-term business strategy remains unchanged
The continued growth in gross margins during the period of comparison (Q1-Q3 2009: 41.4 %, Q1-Q3 2008: 39.7 %) confirms that the ongoing transformation of the business model into a service and consulting portfolio is the correct approach. Although the consulting segment (BS) was hit harder by the difficult economic conditions in certain core S&T markets than the MS and ES segments, the group's management is adhering to the strategy of solidifying S&T's role as the Business Innovation and Transformation Partner (BITP).
Successful achievements, such as the top position as the leading Consulting Services Provider in CEE, ahead of IBM, Deloitte and Accenture, provide conformation for S&T that it should continue to pursue this sustainable strategy. (Results of the Gartner Group Report can be downloaded from www.snt-world.com).
Taking into account the Group's traditionally strong performance in Q4, the management board is forecasting total sales of 415-425 million euros and EBIT of approximately 4 million euros for 2009.
Following a year of consolidation, the focus will again be on sales and marketing in 2010. CEO Christian Rosner comments: "While we do not believe that the market will grow significantly in the first half of the year, we expect that our restructuring measures and intensified customer focus will have a definite positive effect on our results from Q3 2010."
In addition and as already announced, S&T will continue to actively pursue strategic acquisitions.
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