Altran finishes 2018 on a strong note. Stock up 7%

/ February 28, 2019/ Altran, Aricent, Financials, France, US

Altran reassured investors with its Q4 2018 and full-year 2018 results.

Q4 2018 revenues were up 11.5% yoy at CC/CS, thanks to all geographies doing well:

  • France, Altran’s largest geography, reassured with a 9.0% CC/CS growth, thanks to strong recruitment.
  • Germany/Austria was up by 15.2% (at CC/CS), with growth coming from several contracts with automotive OEMs. Altran has successfully turned around Germany after struggling for several years
  • Legacy Altran North America performed well (+14.1% at CC/CS) thanks to the semiconductor sector and software product development. Aricent had weak revenues, with its communication business still declining, its IBM business “in line” with expectations and Frog being flat
  • Finally, the UK has a good performance thanks to Cambridge Consultants and its positioning in digital (security, analytics, and Frog).

Altran, therefore, finished 2018 on a strong note. Altran’s 2018 revenues were up 8.0% at CC/CS to EUR 2,916m.

Altran’s EBIT margin was 7.4%, down 140 bps impacted by a series of one-offs related to the acquisition of Aricent and restructuring costs. Excluding these items, Altran had a remarkable performance (by onshore standards) with an adjusted EBIT margin of 12.1%, up 120 bps. This positions Altran as being more profitable than Alten. The profitability improvement is not all related to Aricent: excluding the Aricent impact, the margin of legacy Altran was still up 20 bps.

Also, Altran improved its FCF (EUR 307m in H2, after a negative EUR 225m in H1) thanks to a better focus on cash collection and a EUR 101m one-off. Altran reduced its net debt to EUR 1.3bn (vs. EUR 1.7bn in H1), representing a net debt to EBITDA ratio of 3.0, not too far from its 2020 objective of a 2.5 leverage.

Investors were relieved and sent the stock up 7%. And indeed, the performance of Altran is worth noting. The company faced many headwinds during 2018 (integration of Aricent, forgery in Aricent’s accounts, stock market volatility, and softness in Aricent’s communication business) but executed well at an operational level.

Looking ahead: 2019 looks promising. Altran believes that market conditions remain good. The performance of Aricent should improve in Q2 thanks to its communication business resuming growth. Frog is gradually accelerating thanks to European clients.

There will be a new headwind though. Altran suffered from a cyber attack in February, which should impact the firm financially . The company declined to comment on the revenue impact, with the press mentioning EUR 20m. Revenue growth in Q1 will, therefore, be impacted. Altran is expecting no impact from this cyber attack on its profitability, largely because it was insured for this kind of risk.


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