Robust half-year 2021 performance
• Recurring Operating Profit (ROP) increasing to €62.3 million (up 40%) and operating profitability reaching 5.0% (up 140 bp)
• Net Profit from continued operations at €31.3 million versus €5.8 million in first half of 2020
• A 1.7% increase in revenue driven by the good growth dynamics of the Digital Services and Solutions segment (up 7.7%), accounting for two-thirds of the half-year revenue.
Overall improvement of operating profitability across all Econocom Group business segments
The Econocom group’s board of directors met on 21 July 2021 and validated the consolidated statements for 30 June 2021.
Over the period, business activities developed as follows:
• The revenue posted by Digital Services and Solutions (DSS) segment stood at €794 million, up sharply by 7.7%, driven by the dynamics of its two business segments, Products & Solutions and Services, up 9.9% and 3.7% respectively. As far as Products & Solutions is concerned, Econocom continues to benefit from the economic recovery in Europe and the ever-increasing demand for digital assets. Services remains well positioned thanks to the ramp-up of higher value-added projects. DSS's ROP came out at €44.8 million (vs. €34.1 million in the first half of 2020), i.e. profitability increased to 5.6% (up 100 bp).
• The Technology Management & Financing (TMF) segment is set to pursue its transformation thanks to the recruitment of new commercial talents while continuing to be more selective about picking its commercial contracts. In the first half-year, TMF’s Recurring Operating Profit reached €17.5 million (vs. €10.3 million in the first half of 2020), i.e. an increase in profitability to 3.9% (up 180 bp). The business in the first half of 2021 generated a €446 million revenue, down 7.5%.
Globally, the group posted revenues of €1,239 million in the first half of 2021, up 1.7% on a like-for-like basis. This performance was achieved in spite of a backdrop of supply and procurement disruptions, which resulted in late deliveries that impacted some activities.
Group Recurring Operating Profit (ROP) rose significantly to €62.3 million compared with €44.6 million over the same period in 2020 (up 40%) and €41.1 million over the same period in 2019 (up 52%). Profitability improved across all business segments, reaping the full benefit of rising business margins and of the cost-cutting programs launched as of 2019.
Non-recurring net expenses fell sharply to €7.6 million (vs. €23.6 million in H1 2020), owing to completion of the transformation plan.
As a result, in H1.21, Net Profit from continuing operations hit €31.3 million vs. €5.8 million in H1 2020.
After factoring in the result of discontinued operations, Net consolidated profit for the period amounts to €30.1 million vs. €22.1 million in H1 2020. For the record, the €22.1 million included some €19 million of net capital gains on the disposal of discontinued operations.
Resumption of the external growth policy with the acquisition of Trams
Bolstered by a strengthened financial structure and sharply lower operating costs, the Econocom Group has, in 2021, resumed an ambitious segment- and country-based acquisition policy. Targeting companies selectively is part and parcel of the Group's development strategy in geographical areas where it already has a strong presence, with the goal of accelerating synergies between its various business segments.
Econocom is set to speed up acquisitions in its Services business in France, in its Products & Solutions business in the UK and Spain, and in its Technology Management & Financing (TMF) business in France and Germany.
In this context, Econocom announces that it has acquired a majority stake in Trams Ltd in the United Kingdom on 20 July 2021. Established in 1990, Trams is a recognised player in IT distribution in the UK thanks to its having entered into key partnerships with Apple, HP, Lenovo and Dell. This alliance with Trams, which will expand the group's footprint in a core target country, fits in perfectly with the group's strategy of building an attractive global offering around distribution. This will also foster strong complementarities with TMF's digital asset financing solutions. Trams employs 40 people based in London, and had a turnover of £42 million in 2020.
Outlook
The group has full confidence in its ability to deliver sustained and long-lasting growth going forward. In September, it will present to the financial community the specifics of its main areas of development for 2022.
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