Second quarter 2021 highlights
Comments by the CEO
Continued strong growth and new contract wins
Transcom continues to grow strongly, with 11% organic growth in the second quarter compared to the same quarter last year. The growth is primarily driven by continued positive development in the eCommerce & Tech sector, growing 32% and amounting to 42% of total revenue in the quarter. EBITDA is impacted by investments in growth, consequences of the Covid pandemic and weak demand in Spain.
Annual revenue of new contracts closed in the second quarter amounted to €73 million, up from €12 million the same period last year. During the quarter, we welcomed clients to our newly opened nearshore and offshore locations in Colombia, Spain and Bosnia Herzegovina. These locations and contracts will ramp-up from Q3 and contribute positively to EBITDA from Q4 and onwards.
In July, we closed the acquisition of City Connect, primarily targeting the German market with delivery from nearshore Adriatic region. City Connect has an annual revenue of €15 million, strong profitability and is growing fast.
The different phases of the pandemic continue to influence our business. Our offshore locations are still in strict lockdowns and business continuity cost amounted to €1.4 million in the quarter. As North America and Europe open up, the competition for talent increases and temporary Covid-related business is phased out. We are adapting our operations and price/wage structure to the changed environment. In Spain, the demand from telecom and banking clients is weak and actions will be taken during the third quarter.
In Q2 we successfully completed an issuance of €315 million floating rate notes with maturity in Dec 2026, primarily used to refinance outstanding debt and increase cash available for investments in growth.
We expect issues impacting profitability to linger into the third quarter. For the fourth quarter, we expect a strong development, supported by actions taken and recent contract wins.
Transcom is on a trajectory of growth and increased profitability. We continue to execute on our strategy, focusing on clients and operational excellence through strong culture and leadership. Moreover, we are continuing our shift towards digital services, clients in eCommerce & Tech and increased near/offshore delivery.
Jonas Dahlberg, President & CEO
Q2 2021 Financial Update Webcast
Transcom will host a live webcast on Friday, August 27, 2021 at 9:00 CET. The presentation is available on https://www.transcom.com/en/investor-relations, direct link.
Date/Time: Friday, August 27 at 9:00 CET
Important note: Please register via the link above at least 5-10 minutes prior the webcast in order to obtain the webcast link. If you register in advance, you will be sent an email reminder an hour prior to the webcast.
*EBITDA and Net debt including IFRS 16 Leases, please refer to note 13 for details of restated figures for comparison periods.