AKKA: Third-Quarter 2021 Revenue
03 Novembre 2021 - 5:46PM
Business Wire
Ongoing Improvement in the Business
Environment
Regulatory News:
AKKA (Paris:AKA) (BSE:AKA) (ISIN:FR0004180537):
Q3 2021 PERFORMANCE
- Ongoing business improvement across BUs
- Good traction in mobility and non-mobility sectors
- Robust demand for digital solutions fueling growth
2021 OUTLOOK
- Recovery on track, with “restore profitability before growth”
pattern
- Q4 revenue expected to grow double-digit compared to Q4
2020
- Full-year revenue expected to grow low to mid-single-digit
- Previous outlook on costs and expected benefits from the
transformation plan confirmed
ONGOING IMPROVEMENT IN THE BUSINESS ENVIRONMENT IN Q3 2021
AND ROBUST DEMAND FOR DIGITAL SOLUTIONS
€M
Q3 2021
Q3 2020
REPORTED
GROWTH (%)
ORGANIC
GROWTH (%)
FRANCE
115.9
108.2
+7.2%
+7.1%
GERMANY
86.8
84.6
+2.6%
+2.6%
INTERNATIONAL
63.9
56.4
+13.4%
+12.5%
NORTH AMERICA
59.7
60.8
-1.8%
-1.8%
DATA RESPONS
45.5
41.1
+10.8%
+2.0%
TOTAL GROUP
371.8
351.0
+5.9%
+4.8%
- The improvement in the business environment that continued in
the third quarter of 2021 resulted in AKKA reporting revenue of
€371.8m up 5.9% reported and +4.8% organically compared to Q3
2020. Important is to remind that in any year the third quarter
of the year is the lowest quarter of the year due to the summer
vacation, that was stronger than usual this year.
- This positive momentum continues across all Business Units
(BUs), all of them achieving organic growth but the North
America BU where the business repositioning towards higher margin
engineering solutions continues to prevail.
- Non-mobility sectors recorded globally a 9% growth in Q3
compared to Q3 2020, with a strong demand for digital solutions
across a variety of sectors and customers. The Life Sciences sector
performed nicely and is now the third sector of the Group, behind
Automotive and Aeronautics.
- Mobility sectors continue to improve with a 5% growth
compared to Q3 2020, even in the absence of large-scale
projects. Automotive showed growth in line with the Group
despite the shortage of semi-conductors, with differentiated trends
depending on the countries and customers. The Aeronautics growth,
that was striking in Q2, continued in the third quarter with a
number of small to mid-size projects. Defense dynamism continues
with double-digit growth in Q3, while demand in the Railway sector
remains subdued.
ANALYSIS PER BUSINESS UNIT
- BU France posted revenue of €115.9m in Q3 2021, a 7.2%
growth on Q3 2020 (+7.1% organically). The Aeronautics sector
reported significant growth compared to the low point of Q3 2020,
with a robust traction from smaller customers pending the recovery
in large-scale programs that should materialize in the coming
quarters. Automotive suffered from the lack of new projects. Space
and Defense continued to grow double-digit compared to Q3 2020.
Non-mobility sectors are broadly flat this quarter. Across sectors
demand for digital experts is strong, and ambitious recruitment
plans are being deployed to fuel future growth.
- BU Germany posted revenue of €86.8m in Q3 2021, a 2.6%
growth on Q3 2020 (+2.6% organically). Q3 2020 represents a
more challenging basis for comparison as a significant step-up in
the recovery pattern occurred in that quarter. The positive
momentum continues since then with a very strong order book: the
book-to-bill ratio remains firmly above one, but conversion into
revenue is still lagging. In order to respond to our customers’
growing need for expertise and advice in the field of
digitalization a Digital Center of Excellence has been inaugurated
in Leipzig in September to support the recruitment and training of
engineers and digital experts.
- BU International posted revenue of €63.9m in Q3 2021, a
13.4% growth on Q3 2020 (+12.5% organically). As the business
environment is now back to 2019 levels and is expected to remain
strong, this BU has recorded remarkable performance, with
double-digit growth both in the mobility and the non-mobility
sectors, with a strong demand for high-margin digital solutions
fueling revenue expansion.
- BU North America posted revenue of €59.7m in Q3 2021, down
-1.8% on Q3 2020 (-1.8% organically), as the strategy to
discontinue the lower-margin contracts is being rolled-out; such
contracts had offset the low demand for higher-margin activities in
2020. The selection of AKKA by a global automotive OEM to provide
engineering and manufacturing services in North America, as
announced in September, illustrates the success of the
diversification towards automotive in this region. This sector now
accounts for 9% of the revenue compared to less than 5% a year ago,
with a global automotive OEM being among the top 3 of the customers
of the BU.
- Data Respons posted revenue of €45.5m in Q3 2021, a 10.8%
growth (+2.0% organically), a comparatively strong performance
as Data Respons managed to record positive growth throughout the
full 2020. As in previous quarters, the performance is contrasted
between the engineering solutions and computer solutions
businesses. In the former, the strong pure digital player
positioning continues to drive growth, while the computer solution
business remains under pressure due to the global shortage of
semi-conductors. The very strong book-to-bill ratio in the computer
solutions segment, now close to 2, should allow for double digit
growth when the supply for semi-conductors normalizes.
PARTIAL REPAYMENT OF SCHULDSCHEIN TRANCHES
- Considering the Group strong liquidity as of September 30,
2021, €197m of Schuldschein tranches maturing October 2022
bearing interest of 1.3% have been reimbursed without
penalty at the end of October 2021. AKKA Group has solid
financing structure and other credit lines to ensure its working
capital requirements and fund its growth. This operation will
result in annual savings of approximately €0.9m.
OUTLOOK
- The Group’s recovery pattern of restoring profitability
before growth is on track. The largest BUs, such as BU Germany
and BU France, where the restructuring plans are finalized,
continue to focus on returning to 2019 profitability levels, while
this objective will already be achieved for North America in Q4
2021 (operating margin adjusted). Data Respons and BU International
will already exceed this benchmark in 2021 thanks to strong
business dynamics enabled by their positioning in digital services
across multiple sectors.
- As the business momentum continues to improve, AKKA expects
revenue to grow double-digit in the fourth quarter of the year
compared to Q4 2020. Therefore, AKKA confirms it expects low to
mid-single-digit revenue growth for the full year.
- The outlook previously communicated in terms of costs and
expected benefits from the transformation plan remain valid:
- The additional cost reductions derived from the Fit-2-Clear
transformation plan, together with the first savings linked to the
implementation of the restructuring plans to adapt our capacities
to the foreseen demand in the Group’s largest BUs should allow for
a year-on-year reduction in the Group's cost base of about €70
to €75m.
- Around €75m of costs below the Operating profit (adjusted) line
will be accrued for in the full year of 2021 (excluding the
amortization of the intangibles arising from the allocation of Data
Respons purchase price), in continuation of the Group’s
transformation.
- In light of the recovery materializing across BUs, and due to
the operating excellence the Group is focused on, AKKA expects
its H2 2021 net profit to be back to the positive
territory.
- Finally, the Free Cash Flow is expected to remain negative
for the full year due to the one-off cash outflows arising from
the restructuring plans and Fit2Clear implementation costs accrued
in 2020 and 2021.
AKKA AND MODIS TO UNITE TO BUILD A GLOBAL SMART INDUSTRY
LEADER
- Following the announcement on July 28, 2021 of the Ricci family
and Swilux S.A., a wholly-owned subsidiary of Compagnie Nationale à
Portefeuille SA ("CNP"), collectively holding approximately 60% of
AKKA's capital and 68% of the voting rights, having irrevocably
agreed to sell their stake to the Adecco Group's subsidiary Modis,
the processes of obtaining all regulatory authorizations follow
their course. The closing remains expected in the first quarter of
2022.
- Following the closing of the first step of the transaction,
whereby the Adecco Group will have acquired a controlling interest
in AKKA, the Adecco Group will launch a mandatory takeover bid in
Belgium and France for the remaining AKKA shares at the same price
of €49 per share (the "Mandatory Takeover Bid"). The Mandatory
Takeover Bid will be unconditional. Holders of AKKA shares will
therefore have the possibility to offer their shares for € 49 per
share in cash, or an equivalent price in cash per subscription
right or per convertible bond/ODIRNANE.
2021 OUTLOOK
- Recovery on track, with “restore profitability before growth”
pattern
- Q4 revenue to grow double-digit compared to Q4 2020
- Full-year revenue expected to grow low to mid-single digit
- Previous outlook on costs for FY2021 confirmed
- H2 2021 net profit to be back to the positive territory
- Full year Free Cash Flow expected to remain negative, due to
one-offs
Nathalie Buhnemann, Chief Financial officer,
and Stéphanie Bia, Group Communications and Investor Relations
Director, are pleased to invite you to a conference call on
Wednesday, November 3rd, 2021 at 18:30 PM (CET).
Upcoming events: FY 2021 results: Thursday, 10th March
2022
In case of discrepancies between the French and English versions
of the press release, only the English version shall be deemed
valid.
About AKKA
AKKA is a European leader in engineering consulting and R&D
services. Our comprehensive portfolio of digital solutions combined
with our expertise in engineering, uniquely positions us to support
our clients by leveraging the power of connected data to accelerate
innovation and drive the future of smart industry. AKKA accompanies
leading industry players across a wide range of sectors throughout
the life cycle of their products with cutting edge digital
technologies (AI, ADAS, IoT, Big Data, robotics, embedded
computing, machine learning, etc.) to help them rethink their
products and business processes. Founded in 1984, AKKA has a strong
entrepreneurial culture and a wide global footprint. Our 20,000
employees around the world are all passionate about technology and
share the AKKA values of respect, courage and ambition. The Group
recorded revenues of €1.5 billion in 2020. AKKA Technologies (AKA)
is listed on Euronext Paris and Brussels – segment B – ISIN code:
FR0004180537.
For more information, please visit:
https://www.akka-technologies.com/
Important notice about forward-looking information
Information in this press release may involve guidance,
expectations, beliefs, plans, intentions or strategies regarding
the future. These forward-looking statements involve risks and
uncertainties. All forward-looking statements included in this
release are based on information available to AKKA as of the date
of this release, and we assume no duty to update any such
forward-looking statements. The forward-looking statements in this
release are not guarantees of future performance and actual results
could differ materially from our current expectations. Numerous
factors could cause or contribute to such differences. Factors that
could affect the company’s forward-looking statements include,
among other things: global GDP trends and the demand for temporary
work; the impact of the global outbreak of novel coronavirus
disease (Covid-19); changes in regulation of temporary work;
intense competition in the markets in which the company operates;
integration of acquired companies; changes in the company’s ability
to attract and retain qualified internal and external personnel or
clients; the potential impact of disruptions related to IT; any
adverse developments in existing commercial relationships, disputes
or legal and tax proceedings.
APPENDIX - GLOSSARY
ECONOMIC GROWTH: Growth at constant scope, exchange rate
and number of working days.
ORGANIC GROWTH: Growth at constant scope and exchange
rate.
PRO FORMA CONSTANT GROWTH: Organic growth based on
proforma figures as if Data Respons had been consolidated from 1st
January 2020.
COMPARABILITY ADJUSTMENTS: Expenses and income related to
significant acquisitions, reorganizations, litigations,
transformation, amortization of intangibles identified as part of
business combinations, stock options and free shares, costs related
to COVID crisis.
OPERATING PROFIT ADJUSTED: Operating profit increased by
comparability adjustments.
OPERATING MARGIN ADJUSTED: Rate of adjusted operating
profit in proportion of Revenue.
REVENUE BY QUARTER
Revenue
(€ million)
Q1 2021
Q2 2021
Q3 2021
France
123.1
123.8
115.9
% change
-19.4%
+11.1%
+7.2%
Organic growth
-19.4%
+11.1%
+7.1%
Pro forma constant growth
-19.4%
+11.1%
+7.1%
Germany
83.7
84.8
86.8
% change
-21.6%
+13.7
+2.6%
Organic growth
-21.6%
+13.7
+2.6%
Pro forma constant growth
-21.6%
+13.7
+2.6%
International
65.1
64.8
63.9
% change
-7.9%
+8.5%
+13.4%
Organic growth
-6.4%
+9.2%
+12.5%
Pro forma constant growth
-6.4%
+9.2%
+12.5%
North America
61.3
57.9
59.7
% change
-20.8%
-4.4%
-1.8%
Organic growth
-13.6%
+4.3%
-1.8%
Pro forma constant growth
-13.6%
+4.3%
-1.8%
Data Respons
52.0
53.1
45.5
% change
ns
+16.0%
+10.8%
Organic growth
-9.5%
+4.2%
+2.0%
Pro forma constant growth
-4.8%
+4.2%
+1.2%
Total Group
385.2
384.3
371.8
% change
-9.6%
+9.2%
+5.9%
Organic growth
-16.4%
+9.3%
+4.8%
Pro forma constant growth
-15.3%
+9.2%
+4.6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103005964/en/
Stéphanie Bia - Group Director for Communications & Investor
Relations Tel. +33 6 4785 9878 Stephanie.bia@akka.eu