Transcom: Interim report 1 January – 30 September 2016
Third quarter 2016
- Net revenue €143.7 million, a 5.3% decrease com-pared to Q3 2015 (151.8). Organic revenue decreased by 3.3%.
- EBIT was €7.6 million (5.3), representing an EBIT margin of 5.3%, compared to 3.5% in Q3 2015 (4.0% excluding non-recurring items).
- Net income €5.9 million (1.9).
- Operating cash flow -€7.1 million (-9.4).
- EPS 22.6 Euro cents (7.4).
- Net revenue €430.9 million (469.7), a decrease of 8.3%. Organic revenue decreased by 6.8%.
- EBIT was €14.4 million (15.9), representing an EBIT margin of 3.3% (3.4%). EBIT excluding non-recurring items was €13.9 million (16.7), corresponding to an EBIT margin of 3.2% (3.6%).
- Net income €8.0 million (8.4).
- Operating cash flow -€4.6 million (11.2).
- EPS 30.5 Euro cents (32.2).
- Net debt/EBITDA 0.9 (0.6).
Comments from the President and CEO
After a challenging first half of the year Transcom’s EBIT margin showed a significant improvement in the third quarter. We have returned to a positive momentum selling free capacity in the English-speaking markets & APAC region.
Good momentum in terms of filling unutilized capacity
While organic revenue in the quarter decreased by €5.0 million (-3.3%) compared to the same period last year, we are enjoying a positive volume trend after a temporary decrease in the first two quarters of the year. Our efforts to win new business started to yield good results during the third quarter in terms of a better utilization of available capacity. As previously disclosed, we see the best growth opportunities in the English-speaking markets & APAC region, which was also the main contributor to the turnaround in revenue development during this quarter. As previously reported, we expect this positive development to continue into the fourth quarter.
As described above, we are experiencing good momentum in terms of sales after a temporary volume decrease in the first two quarters of the year. In our industry, business volumes (demand for customer care support) can vary significantly over time, both during the course of a single day and from month to month. Maintaining a high degree of flexibility and responsiveness is therefore critical to success. Continued growth and a broadening of our client base will further improve our ability to manage the inherent volatility in our business.
Strong EBIT margin improvement
Our EBIT margin improved significantly during the third quarter, from 4.0%, excluding non-recurring items, in the same quarter last year to 5.3% this quarter. Our Group-wide operational excellence program, with the goal of progressing towards achieving our financial targets, was a key factor behind the improvement in the quarter. EBIT this quarter includes the effect of a retroactive one-time price adjustment, which added 0.4 percentage-points to the margin.
The volume increase in the English-speaking markets & APAC region compared to the first two quarters of the year was the main driver of increased capacity utilization and profitability in the quarter. In addition, we have successfully addressed low-performing units.
The realignment of our regional management structure in the Continental Europe region is also progressing as planned. This program will yield €2.9 million in annual cost savings and will take full effect during Q4 2016.
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, October 20, 2016. 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. No pass code is required.
Sweden: +46 8 505 564 74
UK: +44 203 364 5374
US: +1 855 753 2230
For a replay of the results conference call, please visit www.transcom.com to view the recorded webcast of the event.
This information is such that Transcom WorldWide AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 08:00 CET on October 20, 2016.
For further information please contact:
Johan Eriksson, President and CEO +46 70 776 80 22
Ulrik Englund, CFO +46 70 286 85 92
Stefan Pettersson, Head of Group Communications +46 70 776 80 88