Business

Indra’s sales rose 2.2% and EBIT doubled in the first quarter of 2021, also surpassing pre-crisis levels

Fernando Abril-Martorell, Executive President of Indra: The results for the first quarter of 2021 are very good as they show the recovery from pre-pandemic 2019 activity levels while reflecting an improvement in margins due to cost containment. Minsait’s revenues for Q1 2021 are already higher than Q1 2019, while transportation and defense revenues are almost the same, although some projects continue to experience significant delays due to mobility restrictions that still apply.

According to Indra, all items in the income statement improved in the first quarter of 2021 compared to the first quarter of 2020. Outstanding profitability growth is reflected in net profit, which is more than three times higher than Q1 2020 and 22% higher than Q1 2019. Cash generation in the quarter was 42 million euros better than Q1 2020.

The portfolio will continue to grow double-digit for another quarter and will again reach a new high in the history of Indra.

In short, these results are in line with our annual targets and add to our goal of restoring 2019 to pre-crisis levels this year, although the pandemic has not yet been overcome and continues to create uncertainty and complexity in management.

Indra’s portfolio returned to its highest historical level, reaching € 5,322 million in the first quarter of 2021. This means a growth of 10.9% was reported. The portfolio of the Transport and Defense (T&D) business unit amounted to 3,600 million euros, an increase of 17.6% compared to the first quarter of 2020. This underlines the accumulated portfolio in the Defense and Security sector of 2,200 million euros. For its part, the Minsait portfolio decreased slightly (0.9%) in the first quarter of 2021 (affected by the exchange rate by -6 percentage points) and amounted to 1.7 billion. The portfolio-to-revenue ratio over the past twelve months was 1.74, the highest ever (up from 1.50 times in the first quarter of 2020).

Net hires in the first quarter of 2021 showed a 5.2% drop in local currency:

Transportation and defense recruitment increased 3.5% in local currency, driven by strong Defense and security activity (up 27.7% in local currency) mainly driven by the increase in recruitment in local currency. Eurofighter project. Hires in the Minsait division decreased 8.2% in local currency, partly due to the difficult comparison with Q1 2020, when local currency hires increased 10.5% due to multi-year extensions of relevant contracts. However, hiring is expected to accelerate and grow again over the coming quarters.

Sales in the first quarter rose by 5.5% (2.2%) in local currency:

Sales in the Transportation and Defense business unit increased 8.1% in local currency (up 7.3%) in the first quarter of 2021, driven by growth in Defense and Security (20.9% in local currency) major activity in Spain (multi-year projects of the F110 frigates and the NH90 simulator), AMEA (air defense in Azerbaijan and Vietnam) and Europe (major contribution from the Eurofighter project). Also worth highlighting is the growth recorded in the Transportation segment (8.4% in local currency), due to the recording of revenues in the rail project in Saudi Arabia and increased activity in the toll system project on the I-66 motorway in the region UNS. Minsait Division revenue increased 4.2% in local currency in the first quarter of 2021 (down 0.3%), largely driven by the good performance of the public administration and healthcare industry, which saw local growth of 20, 7% listed currency. Sales in the other industries remained at a similar level compared to the previous year (slight growth in the local currency in the areas of energy and industry as well as financial services and a slight decline in the areas of telecommunications and media).

The exchange rate withdrew 24 million euros from sales in the first quarter of 2021, mainly due to the devaluation of Latin American currencies (Brazilian real and Mexican and Peruvian pesos).

Organic revenues (excluding SmartPaper’s inorganic contribution and the impact of the exchange rate) increased 4.3% in the first quarter of 2021. By business area, Minsait recorded organic growth of 2.4% and Transportation and Defense of 8.1%.

The contribution of digital services in the first quarter of 2021 was 130 million euros (27% of Minsait’s sales), which corresponds to a growth of 3.5% compared to the first quarter of 2020.

The EBITDA reported in the first quarter of 2021 amounted to 63 million euros compared to 51 million euros in the first quarter of 2020, which corresponds to a reported growth of 25.1%.

The operating margin reached 52 million euros in the first quarter of 2021 compared to 31 million euros in the first quarter of 2020 (this corresponds to a margin of 6.9% in the first quarter of 2021 compared to 4.2% in the same year 2020) lower depreciation compared to the same period of the previous year:

The transportation and defense operating margin reached 24 million euros in the first quarter of 2021 compared to 15 million euros in the first quarter of 2020, which is a margin of 9.1% in the first quarter of 2021 compared to 6.2% in the same period of 2021 the previous year . This improvement in profitability is explained by the growth in sales, the efficiency measures of the action plan and the best comparison of the Eurofighter.

Minsait’s operating margin reached 28 million euros in the first quarter of 2021 compared to 16 million euros in the first quarter of 2020, a margin of 5.8% in the first quarter of 2021 compared to 3.2% in the same period last year. due to income growth, the efficiency measures and savings of the action plan, as well as the improvement of margins in energy and industry as well as in health care.

The cost of restructuring the workforce that is not part of the action plan was € 7 million in the first quarter of 2021 compared to € 8 million in the first quarter of 2020.

The influence of the exchange rate on EBIT was -1.9 million euros.

Reported EBIT amounted to € 39 million in the first quarter of 2021 compared to € 19 million in the first quarter of 2020, which corresponds to an EBIT margin of 5.2% in the first quarter of 2021 compared to 2.6% in the same period of the previous year.

The net result was 22 million euros compared to 6 million in the first quarter of 2020.

Free cash flow amounted to -17 million euros in the first quarter of 2021 (-6 million euros excluding the cash outflow of 11 million due to the staff conversion plan) compared to -59 million euros in the first quarter of 2020 due to the improvement in the profitability of the operating business, the lower consumption in working capital and the lower investment costs compared to the same period last year.

Net debt reached 505 million euros in the first quarter of 2021 compared to 633 million euros in the first quarter of 2020 and 481 million euros in the 2020 financial year. The net debt / EBITDA ratio for the last twelve months (excluding the effects of IFRS 16, the costs) is derived from the Action Plan and Capital Gain from Metrocall Sale that Affected Fiscal Year 2020) was 2.4 times in March 2021 compared to 2.2 times in March 2020 and 2.5 times in December 2020.

2021 goals

Income in 2021: more than 3,200 million euros at constant exchange rates.

Reported EBIT 2021: over 200 million euros.

FCF 2021: more than 120 million euros (excluding cash outflows according to the staff conversion plans).

Human resources

The final workforce at the end of March 2021 consisted of 48,979 employees, a decrease of 2.0% compared to March 2020 (1,019 fewer employees, despite the increase in the workforce due to the acquisition of SmartPaper, initially with 1,047 employees). Compared to the end of December 2020 (49,027 employees including the SmartPaper workforce), the final workforce remained practically stable (48 fewer employees). The average workforce decreased 2% in the first quarter of 2021 compared to the first quarter of 2020.

Transport and Defense (T&D)

Sales in the Transportation and Defense business area increased 8% in local currency in the first quarter of 2021, driven by growth in Defense and Security (+ 21% in local currency). On the other hand, sales in local currency in the transportation industry declined 2%.

Transport and defense recruitment increased 3% in local currency in the first quarter of 2021, driven by strong Defense and security activity (28% increase in local currency).

The portfolio over sales ratio has improved in the last twelve months to 3.16 times compared to 2.61 times in the same period of the previous year. The book-to-bill ratio of hires to sales was 1.03 times compared to 1.09 times in the same period last year.

Min string

Minsait’s revenue increased 4.2% in local currency in the first quarter of 2021, mainly driven by the public administration and healthcare industry (21% increase in local currency). In the other sectors, sales remained at a similar level compared to the previous year (slight growth in energy and industry as well as in financial services and slight decline in telecommunications and media).

Without the inorganic contribution from SmartPaper (Italy’s BPO company, acquired December 31, 2020) and the impact of the exchange rate, the Minsait division’s revenue would have increased 2.4% in the first quarter of 2021.

The contribution of digital services in the first quarter of 2021 was 130 million euros (27% of Minsait’s sales), which corresponds to a growth of 3.5% compared to the first quarter of 2020.

Minsait’s hiring decreased 8% in local currency in the first quarter of 2021, with all sectors declining except energy and industrial.

The portfolio over sales ratio has improved by 0.90 times in the last twelve months compared to 0.86 times in the same period of the previous year. The book-to-bill ratio of hires to sales has deteriorated slightly to 1.36 times compared to 1.54 times in the same period last year.

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