31.7.2008 | Austria

S&T Service Business Grows 20% in 1st half year 2008

Despite market weakness sales growth and rise in results

The S&T Group also closed the 1st half of 2008 on a positive note. Total sales rose 4% to 237.4m euros, a new record high. EBIT for the IT consulting and services provider saw a slight gain of 1.4% to 3.7m euros, despite expenses for individual project restructuring operations, while EBITDA grew 2.8% to 7.3m euros. The total gross margin rose to over 40% (+18%).
Sales in the consulting and services business developed particularly well. In the first half of
2008, S&T reported sales of 75.4m euros in the Business Solutions area – 19.3% more
than the 63.2m euros reported for the same period in the previous year. Sales of 47.2m
euros were generated from large, long term Managed Services contracts with customers
such as OMV, the Spar retail chain and ISS Facility Management. This represents an
increase of 20% compared with the 39.4m euros generated in the 1st half of 2007. The
Managed Services division reported a 20% rise in pure organic growth. These two
business areas contribute more than half of total sales.
The Enterprise Systems division, through which S&T provides IT infrastructure solutions,
recorded a decline of -9% to 114.8m euros compared with 126.1m euros in 2007. The
weak US dollar and local currency fluctuations led to further erosion of weakening prices in
this area of the business, but it was possible to improve margins. In addition, sales were
affected by the prevailing economic conditions causing customers to defer investments.
S&T remains successfully on target. Despite difficult market conditions a new sales record
was achieved and continued the strategy of strengthening the consulting and services
business. The total gross margin also developed very well, rising by 18% compared to the
previous year to over 40%.
S&T reported total sales of 120.8m euros in Q2 2008, with consulting and services
contributing 54% of this result. EBIT for the 2nd quarter of 2008 was 1.4m euros and
EBITDA was 3.2m euros. With a rise of 22% to 24.3m euros, the Managed Services
division recorded the highest growth in sales. Business Solutions brought in 40.8m euros
and Enterprise Systems contributed 55.8m euros.

S&T retains role of market consolidator

The S&T Group will continue to maintain its role as a market consolidator. The company plans to drive future growth through not just organic growth, but also by means of targeted acquisitions in the 2nd half year of 2008. At the moment the eye is on several interesting potential acquisitions. These would primarily support the strategic goals for the Business Solutions and Managed Services divisions.

Outlook 2008

The outlook for the full 2008 financial year will finally be refined when figures for Q3 are available – the company continues though to expect the usual strong performance in the 2nd half of the year.