|
Author: Cornelia Wels-Maug
German Cancom IT Systems, which offers hardware, software, and network products for the PC and Apple environment, as well as IT services, has released its H1 results. H1 2006 revenues were €109.6m, up 3.7%, with gross profits of €21.6m, up 10.7%, and an EBIT of €1.3m, up 45.8% on the comparable period in 2005. Cancom generated 86%, or €94.8m, of its revenues in Germany (up 4.2%) and the remaining 14% (or €14.8m) in Austria, Switzerland and the UK (almost stable at 0.31%). Its headcount was 571 in H1 2006.
Although Q2 revenues were lower than expected and below those of Q1, CEO Klaus Weinmann sees this as a temporary slowdown, mainly due to pending product releases (chiefly of Apple computers) later in the year, and expects sales to catch up again in H2.
Cancom did not release a breakdown of revenues by business segment, but we estimate that its overall activities in the IT services area in H1 will be around the same level as in the entire FY 2005, where they generated 6% of overall revenues (or €13.7m). For H1 this should be in the region of €7m.
Due to its recent acquisition of 75.1% of NSG Netzwerk-Service GmbH from Siemens Business Systems (SBS) for €6m, which has become effective as of 1 July, Cancom expects to grow its IT services activities, and predicts revenues of around €18m against overall revenues of around €270m for full-year 2006.
Comment: Cancom's activities in the IT services sector have - so far - been limited, but its CEO has made a strong commitment to shifting the business in this direction. Weinmann aims to reduce Cancom's overall share of hardware products, which generate margins of around 10%, and to increase its share of IT services, where he expects margins of around 30%.
As part of this strategy, Weinmannn has recently hired IT consultants, put Cancom's non-core business segment Softmail AG up for sale and acquired several companies with expertise in the IT services area. However, only the acquisition of NSG has given this move the necessary momentum. With 670 staff, NSG recorded revenues of €54.7m in 2005, 80% of which were generated via IT services. In acquiring NSG, Cancom is counting on NSG's expertise and existing client relationships. However, NSG has been heavily involved in carrying out work for SBS, but SBS's uncertain future might force Cancom to reduce its dependence on the former owner much sooner than originally planned.
This, plus the integration costs, might make take a toll on Cancom's overall revenues and profitability goals in the near future. Nevertheless, a company like S&T has already demonstrated that a transition towards being an IT services provider with a strong base in the sale of hardware and software can be mastered successfully.
|
