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S&T solutions and services business grew in 2008

Growth in quality as well as increased productivity

By 2011, S&T is aiming to achieve approximately 60 % of overall sales from IT solutions and services. The results from the 2008 financial year provide a solid basis for achieving this, despite the difficult market conditions. In the Managed Services division (outsourcing and outtasking of infrastructure) alone, the business achieved sales of 104.9 million euros, which represents growth of 21 % (2007: 86.5 million euros). Sales in the field of software solutions and IT/SAP consulting (Business Solutions) rose by 5 % to reach 156.2 million euros (2007: 149.1 million euros). These increases have been attained as a result of measures implemented to increase productivity, with employee numbers remaining constant in comparison to 2007.

The Enterprise Systems business division registered sales in 2008 of 252.3 million euros (2007: 286.6 million euros / -12 %), with this decrease from the previous year primarily being the result of exchange rate volatility in the second half of the year and the somewhat disastrous decline in the value of various currencies towards the end of the year, in particular the Ukrainian hryvnia, the Hungarian forint and the Romanian leu. However, margins in this business division have continued to improve and its positive effect on the services and consulting business has been utilized. “Considering the poor overall economic development in 2008 we have attained respectable results, although they could certainly have been better in the first half of the year. 2009 will be no less challenging, but we will tackle it with an aggressive approach,” comments Christian Rosner, CEO S&T.

Good performances: Romania, Ukraine, Croatia and Japan

With sales of 155.2 million euros (-9 %), the S&T Central region* made the largest contribution to the group’s total sales in 2008, followed by DACH with 149.3 million euros (+6 %). The highest growth was achieved in the Asia region, with an increase of +8 % to 13.0 million euros, although the absolute values are still quite small. The Adriatic region remained stable with sales of 117.0 million euros (0 %), whereas sales decreased slightly in the East region to 78.9 million euros (-4 %), mainly because of the above mentioned currency issues. Rosner: “At the individual country level, Romania, Ukraine, Croatia and Japan in particular, as well as some smaller countries, have delivered outstanding contributions to the group results. The performances in Russia, Turkey, Hungary and the DACH region unfortunately came in below our expectations.”

Balanced industry mix

As in previous years, the largest contribution to the S&T Group’s sales came from orders in the manufacturing industry. In 2007, 26 % of sales were a result of projects for the manufacturing industry, and this figure grew to 33 % in 2008. Orders from companies such as Danone in Russia and Mondi Frantschach in Austria have contributed to this development. The share of group sales in the financial services industry dropped slightly, to 19 % from 21 % in 2007. Respective 15 % contributions to group sales were made by the field of retail trade (2007: 14 %), including projects for companies such as Spar Austria, M.video, and Direct Trade, and the field of telecommunications providers (2007: 17 %), including projects for operators such as Bulgarian Telecom and Kievstar GSM Ukraine. 12 % (2007: 15 %) of group sales were related to projects in the field of public administration (numerous government ministries as well as the postal services in Montenegro and Serbia and the state forestry agency in Poland) and 6 % (2007: 7 %) came from the area of energy suppliers and utilities, a figure which includes large projects for OMV and the China National Petroleum Corporation.

Balanced net result

Although S&T could not entirely avoid the effects of the economic downturn in 2008, as reflected by the EBIT of 9.1 million euros (2007: 13.0 million euros / -30 %) and EBITDA of 16.4 million euros (2007: 20.4 million euros / -20 %), the company could still achieve a balanced net result of -0.3 million euros (2007: 3.8 million euros). The result was adversely affected primarily by project restructuring in the first half of the year, as well as exchange rate fluctuations and difficulties in obtaining financing for large projects. The gross margin developed positively, increasing from 34 % in 2007 to 39 % in 2008, mainly as a result of the solutions and services business. “Our group has a solid foundation, and is secured in the mid-term with attractive financing conditions. The crisis offers us opportunities too, of course, and we want to make the most of these in order to gain more market share and to continue on our path of successful development. Nevertheless, strict cost control continues to be an important issue,” states Rosner.

*S&T Regions:
Central: Czech Republic, Hungary, Moldova, Poland, Slovakia, Ukraine
Adriatic: Albania, Bosnia-Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia
East: Bulgaria, Romania, Russia, Turkey
DACH: Austria, Germany, Switzerland
Asia: China, Japan