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Author: Cornelia Wels-Maug
Austrian systems integrator Systems Integration & Technology Distribution (S&T) reported its Q3 results yesterday. Revenues grew 36% to €113.2m, with 10% organic growth. EBITA was €2.9m, up 32%, and EBITA margin was 2.5% compared to 2.6% year-on-year. EBIT margin was 1.3% compared to 1% in Q3 of 2005. Sales in S&T's services divisions rose by 32% to €38.5m, representing 34% of total sales. S&T's Business Solutions (BS) is the fastest growing segment and increased revenues by 57%. Together with Managed Services, they generated the highest margins.
S&T CEO Christian Rosner raised the 2006 guidance for total revenues to €430m (from €400m) and for EBIT to €11m (from €10m).
Comment: S&T has been working ceaselessly over the last years to move away from low-margin hardware to the higher-margin services business, whilst expanding its geographic coverage. The overall increase in its services revenues, which has been particularly spurred by its BS division, confirms the successful incremental execution of this strategy. S&T's BS division mainly offers IT consulting and project-management in the SAP environment and Enterprise Resource Planning (ERP) - core competences which S&T has largely broadened via its multiple acquisitions.
S&T's string of acquisitions has been a chief contributor to S&T's thin profit margins, which are only slightly balanced by an occasional divestment - as in the case of the Greek and Swiss subsidiaries this year. To be fair, S&T's EBITA and EBIT margins have improved, but are still on a comparatively low level. However, those acquisitions helped to lay the ground for future organic growth. Though we expect to see more of the latter in quarters to come, acquisitions still remain high on the agenda. Rosner hinted that he might round off the year with one or two additional acquisitions, bringing the total up to five or six.
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