Alten Slows Down in Q4. Points to Market Adjustment
Alten’s revenues in Q4 slowed down to a growth of +7.3% yoy (at CC/CS ), following double-digit CC/CS growth during Q1-Q3 2019. The company suffered from a demanding comparison basis (+13.7% in Q4 2018), and one lesser working day in several countries (a 0.15% impact on the group’s revenues).
The main reason for the relative slowdown was, however, the somewhat deteriorating market conditions. As Alten had explained earlier: in the two years, the company benefitted from record spending across all verticals. This time is now gone, and sectors are in different cycles of investment. The market remains well-oriented but is just not as buoyant.
Alten is now expecting the ER&D service market spending to return to growth of +5%. It plants to beat the market, with revenue growth in 2020 by 5-7%. Alten’s growth guidance is largely in line with what competitors LTTS and Cyient have reported so far, and with our analysis of the market: 2020 – A Year of Slowdown for ER&D Service Vendors.
Alten has a track record in growing faster than its French competitors, including Altran and Akka. However, this year might be more than previously: Alten’s headcount only grew by 250 engineers in Q4. Despite strong hirings in October and November, the company suffered from high attrition in December. Alten will announce its full-year results in March, and we should get a better view of how 2020 started.