At first glance, SII performed very well during calendar Q3 2020 (corresponding to its Q2 FY21). Revenues were down by only 4.5% yoy at cc/cs. By comparison, Alten’s revenues were down by 19%! SII continued to overperform its French and European peers by a very significant margin.
Europe Has Entered its Second Lockdown. A Look at Financial Implications
Europe has now entered its second lockdown. The lockdowns have different restrictions levels and different lengths. The UK and France are running for the full month of November. Officials in the two countries have, however, warned the lockdown might last longer, until Christmas at least.
Alten Does Better than Expected in Q2. H2 Outlook Is Uncertain
Alten announced better than expected revenues in Q2 with a CC/CS decline of 18.4% (we expected -23%), after a growth of 4.0% in Q1. During H1, the decline was 7.3% (guidance: -9%).
Sweco Demonstrates Its Resilience Despite COVID-19
Sweco had already demonstrated its resilience in Q1, with a +4% organic growth. In Q2, despite COVID-19, the company remained in positive territory (+2%). The performance is a surprise, as Sweco is very sensitive to the number of working days.
Earnings Preview: Revenues of Alten to Plunge in Q2
ER&D’s largest pure-play globally, Alten, will be announcing its Q2 2020 revenue by the end of July. The company had a very decent Q1, with a 4% CC/CS revenue growth. However, it warned that revenues would be down by ~22% in Q2.
Bertrandt Suffers from its Lack of Diversification in Q2 FY20
A bit more than two years ago, the share of Bertrandt was above EUR 100 and its market cap above EUR 1bn. Investors liked Bertrandt’s annual growth of 10% and its high-single-digit EBIT margin. Today, Bertrandt’s market cap varies between EUR350-400m, and the financial performance continues to deteriorate.
COVID-19: Cyient Warns of 15-20% Decline in Revenues in Q1 FY21
Cyient surprised, negatively, the markets by announcing a decline of 9.7% in its Q4 FY20 revenues (to USD 149m) and an adjusted EBIT margin down 440 bps (to 8.4%).
Despite COVID-19, SII Grows – Slightly – in Q4 FY20
Without surprise, French ER&D service vendor SII announced a slowdown in its Q4 FY20 (ending March 31): revenues were up 2.2% at CC/CS during the quarter.
Dassault Sytems Lowers its Q1 2020 Guidance: Read-Throughs for the ER&D Service Industry
Dassault Systems lowered it Q1 2020: the company is now expecting revenue growth in the range of 14%-17%, down from a 20-23% guidance (that includes the acquisition of Medidata). The company has suffered from weaker than expected new license and services revenues. Meanwhile, revenues of Medidata were on a “momentum and license renewals were up too.
EDAG Accelerates its Portfolio Shift in 2020 While Coping with COVID-19
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Two Vendors Put on Hold their Financial Guidance. This Is Only the Beginning!
Two vendors, Assystem and Semcon, have put on hold their financial guidance for 2020. This is only the beginning.
Covid-19 Will Mostly Impact the ER&D Onshore Industry
Since we published our last note on the impact of Covid-19 on ER&D spending, the situation has changed with Covid-19, having now spread to Europe and soon the US. Already, The European Central Bank is predicting a GDP decline of 5% in 2020, based on the impact of three months of confinement.
Akka: 2019 Results in Line. No Visibility for 2020
Akka has not provided a guidance for 2020. The company expects to suffer in H1, from automotive, aerospace and Covid-19
What An Economic Recession Means to the ER&D Industry
The US Federal Reserve yesterday lowered “the target range for the federal funds” by 50 bps to 1%-1.25%. Although the “fundamentals of the US economy remain strong,” “the coronavirus poses evolving risks to economic activity,” communicated the Fed.
Covid-19: Slowdown in ER&D Spending Now Likely
Currently, Covid-19 has only affected China significantly, although having spread in South Korea, Japan, and Northern Italy.
Several ER&D vendors have been impacted so far: Ricardo has warned that the situation in the Chinese automotive market would have a “material” effect on its profit.