Altran Unveils its 2022 Strategic Plan
Altran has unveiled its much-awaited 2022 strategic plan, called The High Road.
Contrary to the previous strategic Ignition 2022, which was about about reinvention and business model transformation, this one strategic plan is about integration of existing assets, about proving the Aricent acquisition was wise and that the strategy will work.
Therefore, the nature of The High Road is mostly financial; in short:
- Revenues: €4.0bn at CS
- An adjusted EBIT margin of 14.5%
- FCF representing 9% of revenues
- A debt leverage ratio of 2.5 by 2020 and of 1.5 by 2022.
Altran now needs to prove it can become an hybrid firm, and move its CS revenue growth and adjusted EBIT margin towards Indian standards. This is a bold move, and we need to give credit to the management of the firm for this.
I will get back later with an in-depth analysis. My initial reaction is that Altran expects to under-perform the ER&D service market for the next five years, with annual revenue growth below that of the market (expected to be 9% from 2018-2022). One may argue that the 9% CAGR is way optimistic, but that it is not the point: what is the purpose of becoming an hybrid onshore-offshore firm if Altran is not able to over-perform the market: the real question is why isn’t Altran over performing the market now that it combines local intimacy, scale offshore specialized offerings, and is the market leader?
Oh well, this is called integration distraction, I suppose.
Stock market reaction was mixed with Altran’s share down 2% yesterday.
The dream is over. Back to reality.