Source: Sopra Steria
Sopra Steria has adjusted its 2018 full-year earnings forecast. Data for the third quarter of 2018 are still provisional and will be published in detail, as planned, on 26 October 2018.
The Group is now aiming for organic revenue growth of at least 4.5% for full-year 2018, and no longer expects to reach the top of its initial target range: “between 3% and 5%”. For the third quarter of 2018, organic growth should be around 3.7%. The operating margin on business activity for the financial year is expected to be around 7.5% (equating to operating profit on business activity slightly higher than €300m). The consensus among financial analysts’ forecasts at 2 October 2018 was 8.5% (cf. “Investors” section of soprasteria.com). Consequently, the Group does not expect to see an improvement in its free cash flow with respect to 2017 (initial guidance: €170m compared to €110m in 2017).
The Sopra Banking Software business will be impacted by two main elements in 2018:
- A major commercial opportunity that did not materialise - Delivery issues arising from commercial success achieved for more than a year now. These issues are in the process of being resolved.
As a result, the operating margin on business activity of Sopra Banking Software is expected at €42m below the previous forecast: around €27m regarding licences and €15m regarding project margin. Those two items also have an impact on the Q3 2018 revenue of Sopra Banking Software, bringing negative growth to around 20% compared to Q3 2017.
Sopra Steria confirms its confidence in Sopra Banking Software’s strategy and its capacity to address transformation issues of the financial institutions through its digital platform offerings.
Sopra Steria will provide its post-2018 targets during its full-year results, which will be reported on 22 February 2019.
Sopra Steria is confident in its ability to bring its independent corporate plan to fruition. Its strategy remains focused on reinforcing its consulting and software activities - particularly for banking - and on investing where needed to drive internal transformation (standardising business models across its different geographic regions, deploying digital solutions and developing human resources).