Akka Slows Down in Q2 Despite A Flat Number of Working Days

/ July 26, 2018/ Akka, Financials, France, Germany

Akka’s CC/CS revenue growth in Q2 2018 slowed down to 6.2% (to EUR 358m), despite a flat number of working days during the quarter. This slowdown comes after an impressive Q1 2018, when CC/CS growth had reached 8.3%, despite one less working day.

The surprise came from Germany, which was flat in Q2 (+0.3% at CC/CS), showing a sharp deceleration after Q1 (7.2% at CC/CS). In the past, the growth of Akka Germany has proved volatile, and this pattern continues in 2018. In the country, Akka is more focused on margins than on revenue growth and has launched a transformation to cross-sell its capabilities across the country, away from subsidiaries and regions.  The company wants to reach an adjusted EBIT margin of 10% in H2.

France continues to operate at a high level (+8.5% at CC/CS despite one the missing working day) thanks to successes in automotive mobility, as well as across aerospace, life science, and energy.

Internationally (i.e., outside of France and Germany), Akka’s growth reached double digits (+13.0%at CC/CS), thanks to a rebound in energy, and continued momentum in life science. International operations remain the fastest-growing unit of Akka.

Across geographies, automotive, which represents 42%of Akka revenues, was up 5% in H1. Aero (21% of revenues) was up 8%.

Akka will underperform the market in 2018. Its financial targets show a priority on margins, over revenue growth. Akka’s guidance is:

  • CC/CS growth over 6%
  • An adjusted EBIT margin over 8%
  • An FCF of 4.5% of revenues.

Akka intends to finalize the acquisition of PDS Tech in Q3 2018 and wants to transform the business model of PDS from recruitment to work packages and projects while servicing the aerospace sector. I continue to have mixed feelings about this acquisition. See more here.

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