Continued positive trend for Proact’s revenue
The healthy growth during the second half of 2018 was sustained through the first quarter of 2019, as revenue increased by 20 % to 921 (758) MSEK, driven by systems sales, which showed a 27 % growth during the quarter, Services revenue increased by 2 % for the quarter, with stable growth in cloud and consulting services, while we notice a negative trend for the support business compared to the corresponding period last year. EBITA, adjusted for non-recurring charges, amounted to 43.1 (42.6) MSEK, which translates to an EBITA margin of 4.7 (5.6) %. The negative impact on EBITA is mainly due to a lower gross margin.
During the quarter, a number of large and systems agreements have been made with a lower gross margin than regularly. These mainly involve deals within the new areas Big Data and Data Analytics, as well as sales to entirely new customers. Over time, the company will increase margins for sales through developing these new offerings and new customer relations.
To achieve an even better match with market demand, ensure internal efficiencies and to increase the focus on our new financial targets, the company has implemented organisational changes, effective from April 1. The objectives of the new organisation are to increase growth, accelerate the acquisition agenda, continue the shift towards self-produced services, and to further enhance the company’s present strengths in professional skills and customer focus. The organisational changes makes the company more cleanly structured, increases scalability and with clearly defined responsibilities in priority areas. Four new management functions have been introduced, for the company’s product and services development, service delivery, acquisitions, and human resources and culture. We halve also made changes to business area structuring, with the intention to boost local capabilities for business development and streamlining. As a consequence of the organisational changes, the company has accounted for non-recurring charges of 11 MSEK during the quarter.
Business Unit Nordics reported a 30 % revenue from the corresponding period the previous year. EBITA earnings were comparable to the previous year, while margins were lower, a result of reduced gross margins in the systems business and lower profitability in the services business. Business Unit UK showed a continued stable revenue growth of 6 %, while maintaining the EBITA margin. Business Unit West also delivered solid growth of 7 %, while a few large systems deals had a negative impact on the gross margin for the quarter compared to the same period the previous year. Business Unit East delivered a strong quarter with a growth of 71 % and an improved EBITA margin. New cloud service contracts were signed for a total value of 61 (40) MSEK, a 53 % increase compared to the same period the previous year.
September 2019 marks Proact’s 25th anniversary, an event which was recognised already in March, as the entire company got together to celebrate, and most importantly, to instate the business strategy, plans and our new organisation. Still a relative newcomer as CEO, it was a very pleasing experience for me to meet all coworkers, taking in their positive energy and their commitment to the company and our future plans. This adds to my conviction that we have the right conditions and together with the new Group management team, I look forward to developing and profitably grow the company
Kista, 25 April 2019