Strong development of cloud services, better profitability in Nordics but continued challenges in West
We summarise the fourth quarter and an eventful 2019, where revenues from cloud services increased by 20 percent and Business Unit Nordic developed positively. At the same time, we saw regional challenges in Business Unit West during the second and third quarters, challenges that continued into the fourth quarter.
Revenues for the full year increased by 3 percent to SEK 3,408 (3,318) million while adjusted EBITA decreased 18 percent to SEK 165.6 (203.0) million, which corresponds to an adjusted EBITA margin of 4.9 (6.0) percent.
Fourth quarter revenue increased by 2 percent to SEK 991 (967) million, compared to the same period in 2018. Organically, revenue decreased by 3 percent, from SEK 954 million to 928, and adjusted EBITA decreased from SEK 57.7 million to 48.9.
It should be noted that the fourth quarter results have been adjusted for non-recurring charges of SEK 5 million pertaining to operational restructuring measures initiated earlier in the year, and for acquisition-related costs of SEK 6 million, mainly attributable to the acquisition of PeopleWare in the Netherlands and Belgium.
Revenue from the Group’s strategically important cloud service business saw a 48 percent increase in the fourth quarter, 16 percent of which was organic, and we signed new cloud service contracts valued at SEK 97 (176) million.
During the quarter, we have maintained solid earnings in Business Unit Nordics, supported by a couple of significant deals, despite a slight decrease in overall revenue for the region. The key figures for the fourth quarter are instead mainly impacted by, as during the previous quarter, challenges in Business Unit West, including Belgium, the Netherlands and Germany.
We are pleased that the measures for improvement implemented in Germany during 2019, related to sales challenges, are proceeding according to plan and we observe improved results compared to the previous quarter. Meanwhile, the challenges persist in the Netherlands, where lower margins have influenced the result. Given this, I still see great opportunities in the Netherlands from the PeopleWare acquisition, where the successful integration will further our ability to bring new services to our unified customer base in the region.
In Business Unit UK, increased earnings from the services business had a positive impact on results, while lower earnings from the systems business and slightly higher costs for sales and administration had a negative impact on results.
During the autumn, the company has taken steps to improve our sales management, in parallel with increasing the efficiency of our service delivery.
We have also implemented cost savings in Business Unit West. Although I am not satisfied with the quarter's results, our overall goals remain where cloud services and accelerated growth through acquisitions are the focus. We also have to maintain revenue and margins in the system business with associated support and consulting services.
I want to close by extending my thanks to all colleagues who are helping Proact to move forward, and equally to our customers too, for placing their trust in us to be their partner.
Kista, 6 February, 2020