EQS-News: adesso SE increases sales strongly by 16 % to EUR 631.1 million in H1 and improves EBITDA by 10 % to EUR 27.7 million/Further improvement in capacity utilisation and profitability expected in H2

adesso SE increases sales strongly by 16 % to EUR 631.1 million in H1 and improves EBITDA by 10 % to EUR 27.7 million/Further improvement in capacity utilisation and profitability expected in H2

* Sales growth of 16 % to EUR 631.1 million in the first half of 2024

* EBITDA increased by 10 % to EUR 27.7 million after six months

* Investments to be maintained in view of demand for digitalisation, with significantly reduced rate of recruitment

* Increase in profitability and further improvement in capacity utilisation expected in the second half of the year

 

In its 2024 half-year report, published today, adesso SE confirms the preliminary figures published in advance. Despite a mixed overall economic situation, the market for IT services remains set for solid growth in the medium term. Demand for adesso’s IT services remained strong in the first half of 2024. adesso significantly increased its sales revenues by 16 % to a new half-year high of EUR 631.1 million. At over 15 percentage points, this growth was almost exclusively organic. adesso is dependent on recruiting highly qualified specialists in order to continue to utilise the great market potential in the future. At the same time, the rate of recruitment has been reduced in order to increase the company’s own capacity utilisation in a sustainable way. The average number of employees, converted into full-time equivalents (FTE), increased by 15 % in the first half of 2024 (previous year: 32 %) and is thus roughly in proportion to the growth in sales. As at the reporting date, adesso employed 10,101 people. Personnel expenses, adesso’s largest cost item, increased only slightly disproportionately to employee and sales growth in the first half of the year, at 17 % (previous year: significantly disproportionately at 40 %). Capacity utilisation recovered more slowly than originally expected, but shows a positive trend over the course of the months and is expected to continue to improve in the second half of 2024. With significantly fewer available working days in the first half of the year compared to the second half of 2024 and one working day fewer than in the first half of 2023, the improvements in the first half of the year are not yet reflected more clearly in the operating earnings contribution. Nevertheless, EBITDA improved by 10 % to EUR 27.7 million (previous year: EUR 25.2 million). In addition, investment in the IT Solutions segment in the first half of 2024 was not sufficiently offset by revenue, with the result that the Corporate Group’s unconsolidated EBITDA was around EUR 12 million lower. Even if further sales opportunities for the Group’s own products are on the horizon for the second half of the year, this segment is not yet expected to see a turnaround in 2024. In the IT Services segment, the Executive Board is planning a significantly higher earnings contribution for the second half of 2024, with a further increase in capacity utilisation and five more working days than in the first half of 2024 (two more working days than in the second half of 2023). With sales revenues of over EUR 1.25 billion (previous year: EUR 1.14 billion), EBITDA is expected to reach between EUR 80 million and EUR 110 million (previous year: EUR 80.0 million).

Driven by broad-based demand for adesso’s digitalisation services, sales revenues in all core sectors increased compared to the previous year, with the majority of these recording a clear double-digit growth rate. With absolute growth of around EUR 19 million each (+40 % and +49 % respectively), the healthcare and utilities sectors were among the main drivers. The public administration industry, which generates the highest revenue, accelerated its growth compared to the first quarter of 2024, which was still affected by delays due to the budget freezes at the end of 2023, and had already achieved sales revenues of over EUR 100 million by the end of the first half of the year. This corresponds to growth of 11 % compared to the same period last year. The services and maintenance business accounts for a notable share of the sales growth. Licence sales with the in|sure Ecosphere product family for the insurance industry were down on the previous year.

Germany accounted for the 17 % sales growth achieved. Outside Germany, revenue increased by 8 %. In the first half of the year, EUR 317.1 million in sales revenues was generated in the first quarter and EUR 314.0 million in the second quarter (previous year: EUR 276.2 million and EUR 270.1 million). This corresponds to a dynamic increase of 15 % in the first quarter and 16 % in the second quarter compared to 2023. EBITDA improved even more strongly in the second quarter of the year, rising by 37 % to EUR 9.9 million. With one more working day than in the previous year and only a slight improvement in capacity utilisation, the second quarter did not yet mark any significant progress in terms of profitability and earnings contribution – as expected, given that it has the lowest number of working days of any quarter.

However, the measures that have been introduced are having an overall effect. The emerging trend of further increasing capacity utilisation with a significantly higher number of working days and the return to normalised personnel cost increases, combined with continued achievable average price increases in the second half of 2024, should lead to a noticeable improvement in the operating earnings situation. In the first half of 2024, personnel expenses rose by 17 % to EUR 449.6 million (previous year: 40 % increase to EUR 383.5 million) and thus continued to slightly outpace average employee growth and sales revenues. Other operating expenses also rose at a higher rate than sales revenues, by 20 % to EUR 75.7 million (previous year: increase of 23 % to EUR 62.8 million). With capacity utilisation remaining below average in the first half of the year and gross profit rising by 17 % to EUR 542.8 million, this increase led to a 10 % improvement in EBITDA to EUR 27.7 million (previous year: EUR 25.2 million).

Compared to the previous year, depreciation and amortisation rose by 21 % to EUR 32.0 million, mainly due to higher depreciation and amortisation of right-of-use assets from leases. Due to higher interest repayments, income from financing activities totalled EUR -5.5 million, compared to EUR -3.2 million in the previous year. Consolidated earnings amounted to EUR -9.9 million (previous year: EUR -6.3 million), and earnings per share came to EUR -1.51 (previous year: EUR -0.91).

Additional figures and information

In the first half of 2024, financial liabilities rose by EUR 18.4 million to EUR 167.6 million, 12 % above the level of 31 December 2023, due to ongoing repayments and new loans being taken out. However, working capital fell by 17 % from EUR 246.1 million on 30 June 2023 to EUR 204.7 million on the reporting date. Compared to the same period of the previous year, operating cash flow improved significantly in the first six months of 2024 by EUR 52.2 million to EUR -18.2 million. As at the reporting date, adesso recognised liquid assets of EUR 52.1 million, compared to EUR 37.8 million in the previous year. Net debt thus fell by EUR 28.0 million to EUR -115.4 million in the same period (30 June 2023: EUR -143.4 million).

Outlook

The macroeconomic conditions have changed only slightly compared to the published forecasts for 2024. Irrespective of macroeconomic developments, the industry-specific framework conditions for the IT sector in the segments relevant for adesso remain good and the sectors continue to be on a trajectory for further growth in 2025. The sales growth achieved and high demand for digitalisation in the core IT Services business, which is expected to continue in the medium term, are fundamentally positive. The measures to increase capacity utilisation are having an impact and offer potential for the second half of 2024 and beyond. At the same time, the rate of recruitment has slowed considerably and measures have been taken to develop cost items in a manner proportionate to sales revenues. In the short to medium term, this should facilitate the profitable growth that management is aiming for and is accustomed to, based on at least average capacity utilisation. In light of the fact that the operating earnings contribution in the first half of 2024 fell short of expectations, the Executive Board has lowered the 2024 forecast corridor for operating earnings to between EUR 80 million and EUR 110 million (previously EUR 110 million to EUR 130 million), as previously announced, while sales revenues are still expected to be at over EUR 1.25 billion.

The full half-year report and a table comparing key performance indicators over a period of several years are available at www.adesso-group.de/en/, in the Investor Relations section.

 

 

adesso Group

With more than 10,100 employees and annual sales of more than EUR 1.1 billion in 2023, adesso Group is one of the largest German IT service providers with outstanding growth opportunities. At its own locations in Germany, other locations in Europe and the first locations in Asia, as well as at numerous local customers adesso offers consulting and software development services for optimising core business processes. adesso also offers ready-to-use software products for standard applications. The development of an own, industry-specific product portfolio opens up additional growth and earnings opportunities and is another key element of the adesso strategy. In 2023 and 2020, adesso was awarded the title of the best employer of its size in Germany across all industries. After having already achieved first place among IT employers in 2016, 2018 and 2020, adesso was ranked first again in 2023.

Contact:
Martin Möllmann
Head of Investor Relations
Tel.: +49 231 7000-7000
E-Mail: [email protected]