Alten adds EUR 100m in revenues this quarter
Alten impressed, again, with its growth performance. In Q1 2019, revenue growth (at CC/CS yoy) reached +12.5%, to EUR 643m. This quarter, Alten added almost EUR 100m in revenues, two-thirds of it through organic growth and one third through acquisitions. The Forex impact was negligible.
- France, Alten’s domestic market, reached a 12.5% CC/CS yoy growth. Quite surprisingly, aerospace was up by ~17% still driven by data science and manufacturing engineering. Automotive was up by 5% with one of the OEMs having completed its offshoring program to Morocco
- North America, Alten’s second largest market, performed well with revenues up by 16.2% (yoy at CC/CS) to EUR 72m. Automotive drove the growth (+30%)
- Germany was up by 5.6%, with automotive up by 6%. Growth was driven by suppliers, while OEMs differed. German OEMs are turning to offshore and large contracts and Alten expects further cost pressure A large US OEM is disengaging from Europe. Outside of automotive, in aerospace Alten has stabilized its technical documentation business, and completed its relocation offshore
- Finally, in Nordics, Sweden did well thanks to automotive/truck
OEMs,and telecom NEMs.
At a macro level, automotive continues its deceleration. Supplier spending is healthier to that of OEMs. German OEMs are awarding larger contracts than in the past and consider offshoring. US auto is growing fast, albeit of a small base. France is up, with both OEMs now stabilizing on offshoring. Sweden and Italy are also healthy. The slowdown in automotive ER&D spending is taking more time than we expected.
Aerospace continues to do well despite the lack of new aircraft launch. Investment is driven by suppliers (+30%). Telecom, both NEPs and CSPs, was flat with NEPs still reducing their spending (Sweden is an exception).
Finally, the good news is that Alten is starting to slightly change its position on offshore. The company still has a small global delivery network, having now 2,000 engineers in India, Morocco, and Romania. Alten, however, recruited half of its net hires offshore.
We think the growth in Alten’s offshore presence could accelerate. Currently, automotive and aerospace are the company’s main clients for its offshore delivery capabilities. Other verticals could adopt offshore, for large projects and their embedded systems development needs. We welcome Alten’s slight change of perspective and would love to see the firm accelerate on its global delivery network.