Sales for the 3rd quarter of 2014
- Strong sales in Licenses
- Last effects of the refocus of the Services business
- Growth of New Business and continued high rate of Repeat Business
- Robust business in Europe and difficult environment in the BRIC countries
- Impact of currency effects over nine months
Alain de Rouvray, ESI Group’s Chairman and CEO, comments: “Third-quarter sales continue the trend observed during the first half. The Licenses activity showed further strong demand for our innovative solutions, while the Services reflect the refocus in favor of high value added projects. We are anticipating an amplification of the seasonal nature of sales in the fourth quarter due to the repositioning of some License contracts, and the improvement in Services during this period. Encouraged by the commercial momentum of the Licenses, ESI Group maintains its expectations of growth and improvement of profitability over the full year.”
Change in sales in the third quarter and cumulatively
Breakdown of quarterly sales
Sales for the period totaled €19.4 million, stable compared with the third quarter of 2013. Unlike the first half of 2014, foreign exchange effects did not impact sales during the quarter. Licenses sales amounted to €12.8 million, a slight increase of 0.8% at current exchange rates, impacted by the economic and political situation in Russia and in China.
Services sales were down 4.4% at €6.5 million. The impact of the refocus on projects with higher added value, still visible during the quarter, is expected to end in the fourth quarter.
Nine-month sales totaled €62.0 million, a decline of 2.9% at current exchange rates compared with the same period last year. The currency impact was a negative €1.3 million during the period, and stemmed primarily from adverse changes in the Yen. At constant exchange rates, sales were virtually stable.
The product mix is changing in favor of the Licenses activity, which accounted for 68.6% of total sales, compared with 66.7% in the same period last year.
Licenses: robust business
The Licenses business reported sales of €42.5 million, stable in real terms and up 2.2% at constant exchange rates compared with the same period last year. This growth, as mentioned in regard to the first half, was mitigated by the repositioning of major contracts in the fourth quarter. At constant exchange rates, and adjusted for the repositioning of these contracts, the installed base grew. The rate of recurrent business remained high at 78.7%, compared with 78.5% in same period last year. New Business activity totaled €9.8 million at current exchange rates, representing 26.2% of Licenses sales, compared with 25.4% in the same period last year.
Services: further consolidation of business
Services sales totaled €19.5 million in real terms, a decline of 7.0% at constant exchange rates. This was attributable to the continued refocus of the business; an impact which is expected to lessen by the end of the year.
Geographic mix: strong business in Europe
The geographic breakdown of sales over the first nine months reflected a shift in favor of Europe, driven primarily by the Licenses business. This region accounted for 42.9% of total revenues, compared with 40.8% in the same period last year. The trend in Asia (39.1% vs. 39.7%) was mainly attributable to the unfavorable impact of exchange rates and adverse business situation. The reduction of business volumes in the Americas, which accounted for 18.0% of sales compared with 19.5% in the same period last year, resulted from the refocus of the Services business. This masked the strength of the Licenses activity in this region during the first nine months.
Sales in BRIC countries represent 12% of total sales for the period, compared with 15% in the same period last year. This decrease is consequent to some postponed orders in China and Russia and reflects the current economic and political situation in these two countries.
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