Akka posts a strong performance in Q3 with a 12.8% organic growth
Akka was the last to announce its revenue performance in Q3 2018, after Alten and Altran. The performance of the company was strong with a 12.8% CC/CS yoy growth to EUR 350m, thanks to aerospace, automotive and railways/trains. Demand for hybrid and electric engines, autonomous cars, connectivity, and digital overall.
Akka’s performance was consistent with Alten’s own performance, with a stellar CC/CS growth in France +19.6% yoy thanks to automotive and also a one-off equipment sale. Excluding this one-off, growth reached 15.1%. Alten was up 14.3% at CC/CS in Q3.
Germany, Akka’s second largest geography with revenues of EUR 121m, grew by 5.6% at CC/CS. Akka continues to diversify its client base, and the strategy is bearing fruit with double-digit growth with automotive OEMs (VW, BMW), suppliers (Bosch and Continental) and with Airbus. It is refreshing to see Akka achieving mid-single digit growth despite its reliance on the automotive sector, and match the performance of the more diversified (and less risky) Alten (+5.1% at CC/CS).
Finally, international operations continued their double-digit growth (+11.7% at CC/CS) thanks to North America, Italy, Spain, and the UK. Akka has a track record in achieving double-digit growth in its smaller geographies. This may sound counter-intuitive, but year after year, Akka continues to demonstrate how singular its business model can be in its small geos. In the US, Akka has received regulatory clearance to acquire PDS, something its plans to achieve in the next few weeks. The US aerospace sector continues to be healthy, and Akka believes that PDS will achieve a CC/CS growth of 15% during full-year 2018 and reach revenues of USD 300m.
Q1-Q3 2018 CC/CS growth is 9%, and Akka now expects a CC/CS revenue growth of 9% for full-year 2018 (previous guidance: +6%). Again, this is line with Alten, which now expects an 11% CC/CS revenue growth in 2018. We are finding that the performance of Akka is coming closer to that of Alten. The difference lies in the adjusted EBIT margin: Akka targets approximately 8%, while Alten should reach 10%.
Overall, across geographies and vendors, we are finding that Q3 was an exceptional quarter regarding spending growth. This has come as a surprise: the number of working days was roughly unchanged and the summer season usually is not the strongest quarter of the year. We will be writing about Q3 shortly.