QSC concludes weak 2014 financial year and expects stronger earnings and financial performance once again in 2015
- New cost-cutting and focusing programme to create savings of at least € 25 million
- Cautious full-year forecast for 2015
- Revenues of more than € 400 million
- EBITDA of more than € 40 million
- Positive free cash flow
- Management Board proposes dividend of 10 cents per share
Cologne, February 23, 2015. Following the disappointing course of business in 2014, QSC is as previously announced introducing an extensive cost-cutting and focusing programme. This will create savings of more than € 10 million in the current year already. From 2017, the Company plans to achieve sustainable cost reductions of at least € 25 million a year. One specific programme component involves staff cuts affecting around 350 employees over the next two years. The overall programme will substantially assist the Company in boosting its earnings and financial strength in the current financial year already.
Revenues of € 431.4 million in 2014 financial year
Based on preliminary calculations, QSC generated revenues of € 431.4 million in the past financial year, as against € 455.7 million in the previous year. Due to market and regulatory conditions, the volume of predominantly conventional TC revenues with resellers alone declined by € 20.8 million to € 102.6 million. The other business units, by contrast, managed to hold their revenues largely stable. Thanks to the efforts made in the second half of the year, new orders for the 2014 financial year as a whole grew to € 177.4 million, up from € 153.9 million in the previous year.
The overall reduction in revenues in 2014 was accompanied by increased costs, especially for personnel. QSC had substantially expanded its capacities in previous years in anticipation of more rapid growth. With its cost-cutting and focusing programme, the Company will eliminate the gap between revenues and costs from 2015 onwards. EBITDA for the 2014 financial year as a whole totalled € 35.0 million, as against € 77.8 million in the previous year. Net of one-off provisions of € 7.2 million for its restructuring programme, based on preliminary calculations QSC generated purely operating EBITDA of € 42.2 million.
Due to the weak performance in the Reseller segment, upon preparing its 2014 consolidated financial statements QSC has recognised a one-off goodwill impairment of € 18.0 million. Including this write-down, based on preliminary calculations consolidated net profit for 2014 amounted to € -34.4 million, compared with € 23.6 million in 2013.
The free cash flow totalled € -13.9 million in the past financial year, as against € 25.6 million in the previous year. As already explained in autumn 2014, this reduction was due not only to the weaker operating performance, but also to a one-off working capital item of € -19.1 million. The Management Board will propose the distribution of a dividend of 10 cents per share for the past financial year for approval by the Annual Shareholders’ Meeting.
Consistent implementation of ICT and cloud strategy
QSC is pursuing the right strategy by promoting its further development into an ICT and cloud provider. To make up for the decline in the conventional TC business, however, this strategy will require more consistent implementation than previously. To this end, in developing cloud products QSC will be focusing even more closely than before on the core customer needs of cost optimisation, speed and user convenience. Furthermore, the Company is developing a “Pure Enterprise Cloud” to facilitate the integration of traditional applications and new cloud services and thus enable customers to enter the cloud gradually.
With its two-year programme, the Company also aims to achieve substantial savings. Together with additional measures, the planned staff cuts, increased industrialisation of IT operations, and optimisation of procurement will generate savings of more than € 10 million in 2015 already. One key focus in 2015 involves reorganising the increasingly low-margin Outsourcing business, with particular attention being paid to industrialising processes, building up a new cloud platform and focusing on SME projects. In its Outsourcing business, as in other units, QSC will be deliberately concentrating on the “right revenues”, i.e. on sustainable, high-margin revenues.
The new programme also includes a package of measures to boost sales and marketing. QSC will be making greater use of telesales, online sales and other ways of addressing customers directly. At the same time, the portfolio will be aligned even more consistently than before towards the needs of the core SME target group. One particular focus will be on customers in the retail, energy, financial services and mechanical and plant engineering industries.
Against this backdrop, QSC this year expects to generate revenues of more than € 400 million, EBITDA of more than € 40 million and a positive free cash flow. Comments Jürgen Hermann, CEO of QSC: “We will substantially boost our earnings and financial strength in 2015 already. Positioning ourselves as an SME cloud provider remains the right strategy for our business.”
The 2014 Annual Report of QSC AG will be available from March 31, 2015, at www.qsc.de/en/qsc-ag/investor-relations.html. This Corporate News includes forward-looking statements. These are based on current developments and forecasts as to future events made by the management of QSC AG. Due to risks or erroneous assumptions, actual results may deviate substantially from these forward-looking statements.
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