Sales for third quarter 2009/10

15 December 2009 Paris, France
Good resistance trends reaffirmed

ESI Group (ISIN FR0004110310), a pioneer and world-leading solution provider in virtual prototyping and manufacturing processes, announced today its consolidated sales for its third quarter to October 31 2009 and the first 9 months of 2009/2010.

9-month sales

9-month sales

NB: The Group’s FY ends January 31

Breakdown of 9-month sales by quarter

Breakdown of 9-month sales by quarter

NB: The Group’s FY ends January 31

Sales for the third quarter of the Group’s 2009/10 fiscal year totaled 13.8 million euros, up +3.2% compared to the third quarter of the previous fiscal year and up +1.7% in terms of volume (constant exchange rates).

Licenses, on which external growth only has a slight effect, recorded sales of 8.5 million euros, down -5.7%. Services recorded an increase of +21.9% in sales, to 5.3 million euros. Excluding the contribution of the acquisition of Mindware, which is consolidated since mid-December 2008 and totaled 1.4 million euros, Services activity would have been down -11.1%. However, the moderate down change in Services sales over the third quarter 2009/10 should be put in perspective of the negative base effect (with Services sales for the 3rd quarter 2008/09 recording substantial organic growth of +17%). Given the Group’s business model and its third quarter where Licenses activity is traditionally weaker, the Licenses / Services product mix, which is 62% for Licenses and 38% for Services over this period, should thus, for the full fiscal year, be closer to the normative split of about 70% for Licenses and 30% for Services.

Over the first 9 months of the current fiscal year, Group sales totaled 45.0 million euros (+5.4%). In line with what had previously been observed, the -3.6% fall in Licenses activity is explained with a - 25.6% decrease in New Business which highlights the cautious attitude of some clients in the current environment. On the other hand, the rate of License repeat business, linked to annual rentals, has remained at a high 77% rate compared to 76% for the first 9 months of the previous fiscal year. Reflecting the solidity of the Group’s business model, the installed base of repeat business thus increased by +3.3% in actual terms.

Regarding Services, sales were up +27.7% in actual terms and down -6.8% in organic terms. Mindware, whose business recorded significant organic growth, contributed €4.2 million to sales.

On a geographic level, over the first 9 months of the current fiscal year the Americas accounted for 23% of sales, versus 15% a year earlier. This reflects the integration of Mindware, whose business is highly concentrated in the United States.

Alain de Rouvray, ESI Group’s Chairman and CEO, says “Our third quarter is traditionally the least significant, given the seasonality of our business. Nonetheless, these figures reveal a continuation of the trend observed since the start of the year, i.e. a wait-and-see attitude on behalf of clients in terms of new diversification orders, but a reaffirmation of the renewal of the installed base for Licenses, essentially in rental mode, and the maintaining of Services with a highly innovative dimension. In a period marked by weak visibility, albeit with a slight improvement but with significant uncertainty still remaining, this is a positive sign for us that reflects the confidence our clients have in our virtual prototyping solutions, which generate exceptional gains in productivity and competitiveness.”

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