QSC sets new order intake record in third quarter of 2012
- New ICT orders total € 89.2 million
- Transformation process continuing successfully from quarter to quarter
- ICT revenues in Direct Sales grow by 8 percent
- ICT revenues in Indirect Sales grow by 11 percent
- TC revenues with resellers contract by 7 percent
- EBITDA margin improves to 17 percent
- Guidance reiterated for full 2012 fiscal year
Cologne, November 5, 2012. At € 89.2 million, QSC AG recorded the highest level of new orders in its history during the third quarter of 2012; after nine months, total order intake already stands at € 166.0 million. The contract the Company won from a nationwide energy service provider during the past quarter to outsource its entire information and communications technology played a major role in setting this record. This outsourcing contract, which is valued at more than € 60 million over a 5-year term, illustrates the QSC Group's successful process of transformation into an ICT provider. The dynamics of this process can be seen from a comparison of revenues at the three business units with the second quarter of 2012: Revenues at Direct Sales, which together with Indirect Sales comprises the ICT business, rose by 8 percent during this period to € 49.5 million; and Indirect Sales advanced by an even stronger 11 percent to € 32.1 million. On the other hand, there was a 7-percent decline in Reseller revenues, which are generated by TC business, to € 38.9 million. Within the space of a single quarter, the QSC Group grew its overall revenues by 3 percent, or € 3.9 million, to € 120.5 million. However, due to the rapid meltdown of conventional TC business, revenues remained, as expected, below the previous year's level of € 128.3 million.
QSC Chief Executive Officer Dr. Bernd Schlobohm notes: "Stiff pricing competition and unfavorable regulation continue to narrow the attractiveness of conventional TC business. With a view to the very good development of our forward-looking ICT lines of business during the past quarter, our decision to broaden ICT business is proving to be precisely the right move."
Higher profitability in ICT business
A comparison of EBITDA margins underscores the key significance the transformation process has for the development of the QSC Group. In the third quarter of 2012, the QSC Group earned an EBITDA margin of 17 percent in Direct Sales and an EBITDA margin of 26 percent in Indirect Sales; by contrast, the margin in conventional TC business was 10 percent. Overall, QSC recorded an EBITDA margin of 17 percent in the third quarter of 2012, increasing this metric by one percentage point over both the preceding quarter as well as the third quarter of 2011. At € 20.4 million, EBITDA nearly matched the previous year's level of € 20.8 million and significantly surpassed the € 18.1-million level recorded in the second quarter of 2012. As a result of a positive tax effect in the amount of € 0.9 million, consolidated net profit rose to € 7.3 million in the third quarter of 2012, in contrast to € 6.4 million for the same quarter one year earlier.
Reiterating guidance for full 2012 fiscal year
Given the good development of ICT business in the third quarter of 2012, the QSC Group is reiterating its existing guidance for the full 2012 fiscal year: The Company anticipates revenues of between € 480 and € 490 million in operating business, as well as an EBITDA margin of 16 percent and a free cash flow of between € 22 and € 26 million.
Expectations are that the German Federal Network Agency will further heighten regulation in the TC market beginning December 1, 2012. Among other things, QSC anticipates that the fees for utilizing the infrastructure of other providers will be lowered by around one third for fixed networks and by an even greater 40 percent for mobile communications. According to initial internal estimates, these pending decisions are likely to lead to a revenue shortfall on the order of between € 25 and € 30 million per year in the future, and could additionally have a minor impact on profitability, depending upon their exact nature.
For Dr. Schlobohm, one thing is clear: "Classical TC business will continue to remain under considerable pressure beyond 2012. However, thanks to the earlier-than-expected merger of INFO AG, we will already be able to largely conclude our transformation process internally during the coming months and then devote our full strength and power toward expanding ICT business."
|In € million||Q3 2012||Q2 2012||Q1 2012||Q3 2011|
|Consolidated net income||7.3||2.9||2.3||6.4|
|Free cash flow||5.9||6.6||5.8||6.1|
The 9-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.