Q4 2013 financial highlights
- Net revenue €160.2 million, a 1.6% decrease compared to Q412 (€162.9 million). Adjusted for exchange rate impact, revenue increased by 0.5%.
- Gross margin 20.0%, a 1.8 percentage point increase compared to Q412 (18.2%)
- EBIT €-19.0 million compared to €-21.3 million in Q412
- Adjusted EBIT (excluding non-recurring items) €4.3 million compared to €2.0 million in Q412.
- EPS -1.8 Euro cents compared to -2.0 Euro cents in 2012
- The exchange rate impact on revenue was negative €3.5 million, and the impact on EBIT was positive €0.2 million.
Full-year 2013 financial highlights
- Net revenue €653.2 million, a 7.9% increase compared to 2012 (€605.6 million), 8.8% adjusted for exchange rate impact
- Gross margin 20.1%, a 1.6 percentage point increase compared to 2012 (18.5%)
- EBIT €-5.4 million compared to €-17.6 million in 2012
- Adjusted EBIT (excluding non-recurring items €17.6 million compared to €8.9 million in 2012.
- EPS -1.5 Euro cents compared to -2.4 Euro cents in 2012
- The exchange rate impact on revenue was negative €5.4 million, and the impact on EBIT was positive €0.2 million.
Comments from the President and CEO
7.9% revenue increase in 2013 compared to 2012, despite weaker fourth quarter
From a full-year perspective, revenue increased by 7.9% to €653.2 million. Organic growth in our core CRM business, net of currency effects, was 9.3% in 2013. All our regions contributed positively to the top-line growth in 2013, mainly through expanding our relationships with existing clients. In several cases, the excellent work from our delivery teams has allowed us to grow with current clients in new geographies. I expect that this development will continue in 2014. Our long-term goal is to grow revenue at least in line with the overall industry growth in the markets where we choose to compete.
The 1.6% decrease in revenue that we saw in Q4 2013, compared to the same period last year, is primarily attributable to the North Europe and the North America & Asia Pacific regions. In North Europe and North America & Asia Pacific, we ended a number of smaller, unprofitable client contracts. Volume decreases with an existing client at one of our sites in Sweden also had a negative impact on revenue. In addition, lower volumes with some of our accounts in North America affected the top-line, as did a price decrease pertaining to one of our client agreements, following a new contract signing. Organic growth in our core CRM business, net of currency effects, was 1.0% in Q4 2013.
EBIT increased both on a quarterly and yearly basis
Transcom’s adjusted EBIT in FY 2013 was €17.6 million, an increase by €8.7 million compared to FY 2012 (€8.9 million).
In Q4 2013, adjusted EBIT, excluding non-recurring items, increased to €4.3 million (€2.0 million in Q4 2012). Our adjusted EBIT margin was 2.7% in Q4 2013, up from 1.2% in the same period last year. In addition to a €21.1 million goodwill impairment charge, EBIT in Q4 2013 was negatively impacted by €2.1 million in other non-recurring costs: €1.0 million in restructuring related to the closure of the Valdivia site in Chile and the Norrköping site in Sweden, and a €1.1 million loss following the disposal of CMS Germany.
While I am pleased with the positive development in our Central & South Europe region – driven by the deconsolidation of our former loss-making French subsidiary, profitable growth in Italy, and improved efficiency in Germany – the result in our other business units was not satisfactory this quarter. In particular, lower performance in the Iberia & Latam and North America & Asia Pacific regions weighed on margins. In Iberia & Latam, lower volumes and efficiency in Chile during the quarter had a negative impact. Also, the Iberia & Latam region had higher costs related to the build-up of our new site in Cali, Colombia. In the North America & Asia Pacific region, a price decrease pertaining to one of our client contracts impacted results, as well as a decrease in volumes delivered from onshore sites in North America. An important priority for 2014 is to improve results in the North America & Asia Pacific region, both through new business development and increased efficiency. Therefore, we have expanded the management team in the region in order to increase our focus on driving improvements in all countries in the region. In North America, an important objective is to develop new business to be delivered from onshore sites, complementing our offshore business. In Asia Pacific, we have successfully more than doubled our business volumes since 2012. In the years ahead, we expect demand from companies in the Asia Pacific region to continue to grow at a rapid pace. We will focus on positioning Transcom to make the most of these attractive market opportunities.
Johan Eriksson, President and CEO of Transcom
The interim report is also available for download on www.transcom.com
Results Conference Call and Webcast
Transcom will host a conference call at 10:30am CET (09:30am UK time) on Thursday, February 13, 2014. The conference call will be held in English and will also be available as webcast on Transcom’s website, www.transcom.com.
To ensure that you are connected to the conference call, please dial in a few minutes before the start in order to register your attendance.
Sweden: 08-503 364 34
UK: +44 (0) 1452 555 566
US: +1 631 510 7498
Pass code: 28843562
For a replay of the results conference call, please visit www.transcom.com to view the webcast of the event.
For further information please contact:
Johan Eriksson, President and CEO +46 70 776 80 22
Pär Christiansen, CFO +46 70 776 80 16
Stefan Pettersson, Head of Group Communications +46 70 776 80 88