Cornelia Wels-Maug
Comarch grows profitability not revenues in Q2
Polish software house and IT services company Comarch published interim Q2 figures this week. Comarch specializes mainly in billing and network management, customer relationship management (CRM) and sales support, as well as enterprise resource planning (ERP). Revenues were around Zl 90m (€23.1m), below the Zl 101.9m (€26.1m) recorded in Q2 2005. Comarch generated operating profits of Zl 9.7m (€2.5m), up 231% quarter-on-quarter, an EBIT margin of 10.7% and a net margin of 8.6%. The order backlog at end of June was Zl 386m (€99m), up 30% compared to the same period in 2005.After adjustment for the effects of extraordinary items in Q2 - accounting for costs related to the management stock option program and revenues from deferred tax assets due to the Special Economic Zone investment tax benefits - operating profits were Zl 10.5m (€2.7m), up 185%, and net profits were ZL 10,8m (€2.8m), up 302%. The adjusted Q2 operating margin was 12%, up from 4% in Q2 2005, while the adjusted net margin was 12% compared to 3% in Q2 the previous year. No further information on revenue spilt by industry sector or geography, nor guidance for the remainder of the year, was available.Comment: Comarch grew its profitability in Q2, which many of its Polish competitors have struggled with. However, revenues were down compared to the same period in 2005 as well as to Q1 of the current year. In Q2, Comarch launched a new product, a process-driven inventory management solution, which will hopefully generate increased revenues in the near future. Comarch's attempt to increase its export share (see EuroView Daily, 19 May) has been supported by its recently-won deals in Spain, Russia and with the US government. We are looking to Comarch's H1 results, due in September, to answer our remaining questions.
