EDB Business Partner reports revenue of NOK 1,824 million in the first quarter of 2010, as compared to NOK 1,936 million in the first quarter of 2009.
The group's operating profit before intangible asset amortisation (EBITA) was NOK 134 million, as compared to NOK 135 million for the first quarter in 2009. The group's EBITA margin was 7.4 percent, as compared to NOK 7.0 percent in the same quarter of 2009.
"Conditions in the IT services market remained challenging in the first quarter. However, we are seeing some signs of improvement in the market, and the decline in revenue has slowed since the end of 2009. EDB is now seeing growth in revenue in several areas, but we are still affected by lower demand from industrial customers in the Nordic countries. It remains our view that the market will be stronger in the second half of 2010 than in the first half of the year. It is very pleasing to report that EDB has strengthened its EBITA margin this quarter, but we will nonetheless continue with our focus on reducing costs in order to strengthen our profitability", comments Acting CEO John-Arne Haugerud.
Successful launch of "One EDB"
Based on feedback from customers and its own market research, EDB started work in 2009 on a program to develop "One EDB". The results of this program were launched at the end of the first quarter of 2010. The main features include:
• Establishing EDB Consulting Group - a unified and powerful commitment to the consulting market
• Co-ordinated and revitalised focus on the card services area in the Bank & Finance vertical of the Solutions business area
• Simplified legal and organisational structure for the group
• Steps to stimulate organic growth and realise further synergy benefits
• A new corporate logo and brand image to support the changes
"We are hearing positive feedback from EDB's customers on our launch of "One EDB" and our new brand. We are strengthening our focus on innovation and collaboration with our partners in order to create new growth", explains John-Arne Haugerud.
Re>Recent developments include EDB being selected by Microsoft as a "Premium launch partner" in Norway for the global launch of SharePoint 2010 and Office 2010. EDB announces today that it is the first IT company to offer banking applications for the iPad. This is a further development of the company's iPhone applications, launched in February 2010.
Key figures and main features of the first quarter of 2010
• Operating revenue NOK 1,824 million (NOK 1,936 million)
• EBITA margin improved from 7.0 percent to 7.4 percent
• Cash from operations negative at NOK 182 million (positive NOK 19 million)
• CAPEX NOK 37 million (NOK 39 million)
• New contracts: NOK 1.3 billion (NOK 5.0 billion)
Results from the business areas for the first quarter of 2010
IT Operations: The business area reports revenue of NOK 1,076 million for the first quarter of 2010 as compared to proforma NOK 1,102 million for the same quarter in 2009. EBITA for the quarter was NOK 85 million, as compared to proforma NOK 74 million in the first quarter of 2009.
Solutions: The business area reports revenue of NOK 403 million for the first quarter of 2010 as compared to NOK 374 million for the same quarter in 2009. EBITA for the quarter was NOK 49 million, as compared to NOK 48 million in the first quarter of 2009.
Consulting: The business area reports revenue of NOK 452 million for the first quarter of 2010 as compared to proforma NOK 522 million for the same quarter in 2009. EBITA for the quarter was NOK 29 million, as compared to NOK 38 million in the first quarter of 2009.
The Nordic IT services market showed a marked decline in 2009 due to reduced demand, resulting in pressure on prices. However, some areas of the IT solutions market showed growth, and EDB strengthened its position in sectors including bank and finance.
At the start of 2010, there is still reluctance with respect to investments, and downward pressure on prices for some areas of services. EDB is experiencing increased demand in service areas where standardisation of IT infrastructure and automation of work processes is part of cost saving programs. This is reflected by lower demand for development projects, and this has a negative effect on EDB's revenue.
The market research companies IDC and Gartner are expecting an improving trend in the IT services market during 2010, with the prospect of growth in the second half of the year.