Alten – High Organic Growth in Q2 2022 Despite Challenging Comps
Alten Had A High Organic Growth in Q2
Alten enjoyed high organic growth in Q2 2022, despite challenging comps. Revenue growth was 18.9% yoy at cc/cs. The performance was strong given that Q1 2021 revenues were up +19.7%. This is the fifth consecutive quarter of ~20% organic growth.
The company’s utilization rate increased sequentially by 0.4 pts to 92.%, significantly higher than its 92% standard. Attrition remained high at 28%, above Alten’s 20-22% objective. The company raised has advanced the wage increase timing to get attrition under control. Despite the labor market tensions, Alten recruited 1,490 engineers organically, a slowdown after 1,950 in Q1. The company will continue hiring at scale in Q3 despite difficulties in the French labor market.
Automotive and Commercial Aviation Back to Pre-COVID Levels
Alten benefited from a faster rebound than anticipated in commercial aeronautics (+60%) and automotive (+17%, thanks to suppliers). Both sectors are now above their 2019 levels. Previously, Alten expected commercial aviation to return to its pre-COVID level by 2023.
On the negative side, train transportation was down due to the Bombardier account (something that Cyient had already reported). Telecom was flat, despite a 15% growth with NEPs.
No Sign of A Slowdown Yet
Client demand remains healthy across the board, with Alten monitoring KPIs. At this point, the company has not detected any sign of a slowdown. Alten guided investors of revenue growth of 12-15% yoy at cc/cs in H2 (H1: +19.8%). The company is cautious about the macroeconomic conditions and a demanding comparison basis (H2 2021: +24% at cc/cs).
In the meantime, Alten continues to acquire competitors. The company made its largest M&A transaction with that of Methods in London. Methods is an IT services firm specializing in digital servicing the UK public sector. It is Alten’s most significant acquisition, bringing revenues of €110m, and 710 consultants. Alten has accelerated its ‘large’ acquisition strategy after SDG Group in Italy. Expect small transactions for the rest of 2022 as Alten builds its M&A pipeline.