EDB affected by continuing weakness in the IT services market
(Thomson Reuters ONE) -
(Oslo, 15 July 2010) EDB Business Partner reports revenue of NOK 1,809 million
in the second quarter of 2010 as compared to NOK 1,923 million in the same
quarter of 2009. The group's operating profit before intangible asset
amortisation (EBITA) for the second quarter of 2010 was NOK 127 million, as
compared to NOK 151 million for the second quarter in 2009. EDB signed new
contracts with total contract value of NOK 3.1 billion in the second quarter as
compared to new signings of NOK 1.7 billion in the same quarter last year.
"EDB is still being affected by weak conditions in the IT services market,
especially in the industrial segment. In view of this, it is pleasing that we
have achieved growth in turnover in most other segments. The weak market
conditions, combined with price pressure in certain segments, make it necessary
to reduce costs in order to strengthen profitability", comments Acting CEO
John-Arne Haugerud.
"We have received positive feedback from customers, employees and the market on
the plans to merge with ErgoGroup. Our preparations are well under way, and our
objective is to establish a leading Nordic IT vendor with the capacity for
accelerated organic growth and financial strength. A small number of employees
are working on planning the integration, but our main priority continues to be
our operational focus on customers, deliveries and sales", comments Acting CEO
John-Arne Haugerud.
Combination of EDB and ErgoGroup
The boards of directors of EDB Business Partner ASA and ErgoGroup AS recommended
to their respective shareholders on 7 June 2010 that EDB and ErgoGroup should
merge to form a leading Nordic IT company, which would have the capacity for
faster organic growth and the financial strength to exploit strategic and
structured opportunities.
The merger plans were approved by extraordinary general meetings of both
companies held on 8 July 2010. The merger is conditional on approval from the
competition authorities, which is expected to be given towards the end of the
third quarter of 2010, with the latest date for approval of the merger being 3
December 2010. The planning process confirms that we are at the upper end of the
NOK 250-350 million range for synergy benefits that we have already indicated.
Work on realising these synergies will start once the merger is formally
approved by the competition authorities.
NOK 200 million cost program launched
Over the course of the third quarter, EDB will implement a cost program that
will reduce the group's costs in the order of NOK 200 million annually, with the
full effect expected from 2011 onwards. The costs associated with the
implementation of the cost program will be charged to the accounts as
non-recurring items totalling NOK 132 million, of which NOK 12 million has been
recognised in the second quarter accounts and the balance will be recognised in
the third quarter accounts.
The measures to be implemented include streamlining the group's international
office structure as a result of the cessation of some deliveries to the
industrial customer segment, a reduction in central staff costs in connection
with simplifying the corporate structure of the Consulting business area and
better capacity utilisation in the Swedish activities of the IT Operations
business area. The company will relocate part of its organisation in the Oslo
region in the third quarter following the normal expiry of property leases. The
group will offer employees in Norway in the age group 62-67 the opportunity to
retire with the contractual early-retirement pension (AFP) combined with a
supplementary pension provided by EDB for the period to normal retirement age.
Key figures and main features of the second quarter of 2010
* Operating revenue NOK 1,809 million (NOK 1,923 million)
* EBITA NOK 127 million (NOK 151 million)
* Cash flow from operations of NOK 160 million (NOK 168 million)
* CAPEX NOK 40 million (NOK 59 million)
* New contracts NOK 3.1 billion (NOK 1.7 billion)
* EDB and ErgoGroup announce a merger to create a leading Nordic IT company
* New cost program launched to improve profitability
Results from the business areas for the second quarter of 2010
IT Operations: The IT Operations business area reports revenue of NOK 1,049
million for the second quarter of 2010 as compared to proforma NOK 1,101 million
for the same quarter in 2009. EBITA for the quarter was NOK 75 million, as
compared to proforma NOK 91 million in the second quarter of 2009.
Solutions: The business area reports revenue of NOK 414 million for the second
quarter of 2010 as compared to NOK 385 million for the same quarter in 2009.
EBITA for the second quarter was NOK 55 million, in line with the second quarter
of 2009.
Consulting: The business area reports revenue of NOK 457 million for the second
quarter of 2010 as compared to proforma NOK 495 million for the same quarter in
2009. EBITA for the second quarter was NOK 24 million, as compared to NOK 31
million in the second quarter of 2009.
Key figures and main features of the first six months of 2010
* Operating revenue NOK 3,663 million (NOK 3,859 million)
* EBITA NOK 261 million (NOK 285 million)
* Cash flow from operations negative at NOK 22 million (NOK 187 million)
* CAPEX reduced by 21% to NOK 77 million
* New contracts totalling NOK 4.4 billion for the first six months (NOK 6.7
billion)
Future prospects
The Nordic IT services market showed a marked decline in 2009 due to reduced
demand and pressure on prices. Customers remain reluctant to commit to new
investment spending, and continuing downward pressure on prices in the
outsourcing segment meant that the IT services market again showed an overall
decline in the first six months of 2010. There are, however, clear signs of
growth in a number of segments, and this has caused the decline in demand to
level off.
The market research companies IDC and Gartner expect an improving trend in the
IT services market during 2010, with the prospect of growth in the second half
of the year.
In view of the continuing uncertain market situation, EDB has launched further
cost saving measures. The Board of EDB is maintaining a strong focus on ensuring
that the group continues to implement the measures necessary to maintain
satisfactory profitability and competiveness.
Any enquiries may be addressed to:
John-Arne Haugerud, Acting CEO. Tel: + 47 22 77 21 01
Vidar Nysæther, Acting CFO. Tel: + 47 97 08 81 61
Geir Remman, EVP, Corporate Communications. Tel: + 47 970 55 017
About EDB
EDB Business Partner is a leading information technology (IT) services provider
in the Nordic region. We help customers unlock substantial value from the entire
IT services value chain, spanning solutions, consulting and outsourcing. The
company has some 6,000 employees and reported annual turnover of around NOK 7.5
billion in 2009. EDB aims to be a close and attentive partner that combines its
local expertise and deep industry knowledge with substantial international
delivery capacity. EDB Business Partner ASA is listed on the Oslo Stock Exchange
with ticker code EDBASA.
See www.edb.com for further information.
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
[HUG#1431798]
Presentation of 2nd quarter 2010: http://hugin.info/194/R/1431798/378066.pdf
2nd quarter 2010: http://hugin.info/194/R/1431798/378065.pdf
This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: EDB Business Partner ASA via Thomson Reuters ONE
Unternehmensinformation / Kurzprofil:
Datum: 15.07.2010 - 08:01 Uhr
Sprache: Deutsch
News-ID 23943
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Town:
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