Alten (ATE) H1 2024 earnings summary

Executive summary

• First half 2024 results were below expectations, with EBIT/operating margin at 8.4% of revenue, down from historical levels above 9-10%, reflecting a slowdown in activity and lower profitability from recent acquisitions.

• Revenue reached €2,108.0M in H1 2024, up 2.9% year-over-year, with 0.9% organic growth, mainly driven by France (+5.7% organic), while international growth was modest.

• Growth was mainly driven by M&A, with headcount up by 1,400 engineers, especially in India and other low-cost regions.

• The slowdown in activity observed in H2 2023 persisted into H1 2024, with no rebound expected in the second half.

• ALTEN SA filed its Half-Year Financial Report for the period ended 30 June 2024 with the French financial markets authority.

Financial highlights

• Operating margin fell to 8.4% of revenue in H1 2024, compared to above 9% in prior years.

• Free cash flow reached €98M (4.6% of revenue), with a rolling 12-month free cash flow at 6.5% of revenue.

• Net cash position at June 2024 was €302.1M; gearing at -12.6%.

• Net income, Group share, increased to €118.2M (5.6% of revenue), up from €111.1M (5.4%) in H1 2023.

• SG&A increased in absolute terms, but the price-employee ratio remained stable.

Outlook and guidance

• Organic growth for 2024 is expected between 0.5% and 1%, with operating margin guidance of 8.7%-8.9% for the full year.

• No significant rebound is anticipated before 2025; activity is expected to remain sluggish due to continued project postponements.

• Operating margin on activity is projected to be over 9% in H2 2024.

• Management aims to restore EBIT above 10% as business stabilizes and international structure matures.