Alten (ATE) H1 2024 earnings summary

Executive summary

• First half 2024 results were below expectations, with EBIT at 8.4% of revenue and revenue reaching €2,108.0M, up 2.9% year-over-year, driven by France (+5.7% organic) while international growth was modest.

• Organic revenue growth was nearly flat globally, with France outperforming other regions; M&A contributed to total growth.

• Headcount increased to 51,480 engineers, mainly through M&A, with growth distributed across regions except France, which remained flat.

• Engineering services represent 73% of business, with IT enterprise services at 27%; strong competitive positioning in engineering, but lower in IT services.

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

Financial highlights

• Operating margin declined to 8.4% of revenue in H1 2024, mainly due to lower business activity and increased SG&A, especially internationally.

• Operating profit on activity was €177.2M (8.4% of revenue), down from 9.2% in H1 2023.

• Net income, Group share, increased to €118.2M, representing 5.6% of revenue.

• 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; DSO increased by 1 day since December 2023, now at 95 days.

Outlook and guidance

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

• No rebound is anticipated for H2 2024; sluggish activity expected to persist until at least H1 2025.

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