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Author: Dominique Raviart
French R&D services player Assystem has announced its results for Q1 2006. Revenues were €164m, up 43% from Q1 2005 and up 20.9% organically. Organic growth was strong in international markets at 36.5%, and also in France at 14%. Assystem stated that growth was especially strong in the aerospace, facilities and technologies, and systems business units.
A solid performance. Revenues from the French market have improved, from 6.7% organic growth during full-year 2005 to 14%. This compares nicely with competitor Alten, which achieved 22.6% in organic growth in France. It certainly outpaces Altran's Q1 performance: the market leader saw its revenues drop by 3.7% in France. Meanwhile, organic growth in international markets - mostly Germany and the UK - accelerated to 36.5%, up from 28.7% in Q4 of last year. This is more than Alten (22.4% organic growth in international markets) and Altran (12.4%).
Assystem proved last year that despite going through a period of transition and integration of various acquisitions, it could still achieve solid organic growth (10.6%) and a decent operating margin (7.5%). In Q1 of 2006, Assystem proves - in our view - that it has the best strategy of all the R&D services players. The business environment remains favourable, with aerospace and horizontal solutions such as embedded systems fuelling growth. And most R&D services players continue to benefit from market leader Altran losing market share.
We expect Assystem to announce new acquisitions in the coming months. The company has committed to 10% growth for 2006, which it should easily achieve, and €1bn in revenues by 2007. Meanwhile, competitor Alten continues to acquire small competitors: yesterday it announced the purchase of IBC, a player with €11m in 2005 revenues, focusing on the aerospace and automotive markets.
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