QSC accelerates transformation process into ICT provider
- ICT revenues in Direct Sales advance by 29 percent in Q2 2012
- Conventional TC revenues decrease by 25 percent year on year
- In Q2 2012, the QSC Group posted
- Revenues of € 116.6 million
- An EBITDA of € 18.1 million
- A free cash flow of € 6.6 million
- Guidance tightened
Cologne, August 13, 2012. In the second quarter of 2012, QSC AG again accelerated its transformation process into an ICT provider. ICT revenues in Direct Sales rose by 29 percent year on year to € 45.9 million. On the other hand, revenues in the Resellers Business Unit, the vast majority of which consist of conventional TC revenues, fell by 25 percent to € 41.9 million. In the third business unit, Indirect Sales, revenues declined by 6 percent year on year to € 28.9 million, although rising moderately from the first quarter of 2012. The QSC Group grew its revenues by
€ 0.6 million overall from the preceding quarter to € 116.6 million; as a result of the decline in conventional TC revenues, though, it remained below the previous year's level of € 121.8 million.
As a result of the decline in TC business and the strong dynamic in the ICT segment, Direct Sales for the first time made the largest contribution to total revenues in the second quarter of 2012. "Our evolution into an ICT provider is bearing fruit," states QSC Chief Executive Officer Dr. Bernd Schlobohm. "We're reducing our dependency upon conventional, low-margin TC business and step by step we're expanding our position in the forward-looking ICT market."
Strong influx of new orders necessitates workforce expansion
Growth in Direct Sales and new orders involving terms of at least three to five years and a volume of € 40.4 million in the second quarter of 2012, alone, are necessitating expansion of the workforce, especially in IT Outsourcing and IT Consulting. As of June 30 of the current fiscal year, the QSC Group employed a total of 1,417 people, around 80 more that at the outset of the year. Nevertheless, it is only possible to cope with the very high level of new orders in Direct Sales by additionally employing external IT specialists on a temporary basis. Since, in addition, the QSC Group has been operating two fully functional headquarters of publicly traded companies since the acquisition of INFO AG in May 2011 and has been shouldering the ongoing integration costs, its EBITDA of € 18.1 million fell slightly short of the previous year's level of € 19.3 million. EBITDA did improve by € 0.6 million by comparison with the first quarter of 2012, with the EBITDA margin rising by one percentage point to 16 percent. While at € 2.9 million, consolidated net income fell short of the previous year's level of € 3.9 million, it was up € 0.6 million from the first quarter of 2012.
It typically takes six to nine months before this high level of new orders in Direct Sales can manifest itself in corresponding revenue and profitability contributions. It is during this transition phase in the case of Outsourcing projects that the IT infrastructure and IT systems are transferred to the QSC environment, which involves ongoing expenses and preliminary investments on the part of QSC. Nevertheless, capital spending of € 10.9 million in the second quarter of 2012 remained below the previous year's level of € 12.7 million. In spite of higher expenses and investments in future growth during the second quarter of 2012, free cash flow reached € 6.6 million, in contrast to € 7.0 million for the same quarter one year earlier.
QSC Group anticipates revenues of between € 480 and € 490 million for 2012
During the first half of 2012, the QSC Group again accelerated its transformation process into an ICT provider: Direct Sales developed into the segment with the highest revenues. Moreover, the INFO AG merger was concluded in July 2012, earlier than had been anticipated. Against this backdrop, the QSC Group is tightening the guidance it had announced on March 5, 2012: The company now anticipates revenues of between € 480 and € 490 million, an EBITDA margin of 16 percent, as well as a free cash flow of between € 22 and € 26 million. Although the company will already be initiating any number of measures in the second half of 2012 aimed at increasing integration following the merger, which had not been expected to predominantly come to fruition until the coming year under the company's former planning, QSC is thus reiterating all of the minimum targets it had announced at the outset of the year. The QSC Group continues to see the current fiscal year as a year of preparation for reaching its full strength and power. QSC Chief Executive Officer Dr. Schlobohm stresses: "Concluding the merger sooner than expected increases our freedom of action. We want to utilize this opportunity and achieve our annual targets, in spite of the costs this will involve."
|In € million||Q2 2012||Q1 2012||Q2 2011|
|Consolidated net income||2.9||2.3||3.9|
|Free cash flow||6.6||5.8||7.0|
Head of Investor Relations
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The 6-month report is available for download at www.qsc.de/en/qsc-ag/investor-relations.html. This corporate news contains forward-looking statements. These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements.