11.02.2009 | Slovakia
S&T ends the 2008 financial year with a good fourth quarter
Services and consulting business continues to grow
The fourth quarter, which is traditionally strong for the IT services sector, was also profitable in 2008 for S&T, although the crisis was having a considerable effect on the IT market by the end of the year. In Q4 2008, S&T achieved sales of 150 million euros (Q4 2007: 170 million euros) and an EBIT of 4.1 million euros (Q4 2007: 6.9 million euros). Internally, the end of the year was also characterized at S&T by additions to the executive board, a group-wide organizational optimization and the successful conclusion of a number of large projects, such as those for the Ukrainian telecommunications operator Kievstar GSM, Bulgarian Telecom and the Postal Service in Montenegro. “In particular the fourth quarter turned out satisfactorily despite the economic downturn and despite internal restructuring. During the course of the year we successively implemented packages of measures which were originally intended to contribute to an outstanding EBIT result. In the face of the poor market development, these packages of measures ultimately led to us achieving positive results, in contrast to some of our competitors“, comments Christian Rosner, CEO S&T.
With an EBIT of 9.1 million euros (2007: 13 million euros, -30%) and an EBITDA of 16.4 million euros (2007: 20 million euros, -20%), S&T could not entirely avoid the effects of the economic downturn in 2008. However, in view of the good initial position, the consistent application of the business strategy and the stability measures implemented, the management sees no reason for a depreciation of company value. The pre-tax results were weighed down by the general currency volatility in certain S&T countries as well as by the fall in value of the Ukrainian Hryvnia and Romanian Lei currencies. In all, a break-even net result can be expected for the 2008 financial year. “Considering the economic conditions and the development of the IT market, we are satisfied overall with 2008. We had admittedly expected much better results in a number of countries, such as Russia, Hungary, China and Turkey, and somewhat better in DACH as well, but the majority of the countries fulfilled their goals outstandingly“, says Rosner. In addition to exchange rate volatility, the financing of large projects proved to be problematic due to the restrained attitude of banks. Extraordinary costs also arose in 2008 due to the necessity for project reorganization in a number of cases in the first half of the year and the new organizational structure implemented in the group in the second half of the year. At the end of the year S&T employed 3,135 staff and therefore maintained stable staffing levels in comparison to 2007.
Share price hard hit
The S&T share price had already been hard hit during the first three quarters of 2008 by the downward trend on the stock markets, although not to the same extent as the share prices of other ATX-listed companies. By the end of October the price was fluctuating around the 25 euro level. The problems at the AvW-Group, which is one of the large S&T shareholders, then however led to a further, serious fall in the price. Rosner: “The share price development in 2008, in particular since October, no longer has anything in common with the company itself. The price in no way reflects our stable position. We are well prepared for the hard times ahead and still see potential for us even in 2009, due to consolidation in the market“.
2009 to be characterized by stability
The S&T Group is well equipped for tougher market conditions. The customer risks for S&T are spread amongst approximately 2000 large and medium sized companies, and the largest clients generate a maximum of 5% of the total sales. Furthermore, S&T has customers in a diverse range of industry sectors (manufacturing, retailing, public administration, financial services, telecommunications and utilities) and is also represented in various economic zones due to its presence in 22 countries. Not least, S&T can build upon its strong market position – the company is amongst the top 5 providers in almost all of those countries. In the mid-term, S&T is financed with attractive conditions and acts with a stringent risk and receivables management policy and also on the basis of stringent cost management with regard to operational costs and investments. Although the experts forecast low overall IT market growth for 2009, it is evident to S&T that numerous customers are interested in IT solutions, applications and tools that can increase their competitiveness and enable rapid productivity improvements. In addition, an investment stockpile is building up, due to the current hesitancy regarding IT investments, and this could be released during the second half of 2009, depending on developments in the various sectors. “Even though the market is not expected to see any significant growth this year, we have positioned ourselves offensively because the potential is nevertheless there to win market share. We could also profit from the upcoming market shakeout in the IT sector“, states Rosner.