Bechtle (BC8) Q2 2024 earnings summary

Executive summary

• 2024 performance has not met expectations, with Q2 and H1 revenue and EBIT declining year-over-year due to weak demand from SMB and public sector clients, especially in Germany, and challenging macroeconomic conditions.

• Business volume grew 2.2% to €3,783m in H1 2024, but organic growth declined and revenue fell 2.3% to €2,978m.

• EBIT margin decreased, with Q2 EBIT down 11.9% to €81.0m and H1 EBIT down 4.7% to €168.8m; EBT margin nearly stable at 5.6%.

• Gross profit rose 2.7% to €551.0m, and operative cash flow improved significantly to €141.2m in H1 2024.

• Executive Board revised 2024 outlook, now expecting business volume, revenue, and earnings to remain at prior-year levels.

Financial highlights

• Q2 2024 business volume grew 0.9% year-over-year to €1,832m; Q2 revenue fell 2.3% to €1,475m.

• EBITDA decreased 1.3% to €234.4m; EBIT margin in Q2 was 5.6%, down from 6.4% in Q2 2023.

• Operating cash flow more than doubled to €141.2m; free cash flow turned positive at €72.8m.

• Equity ratio increased to 47.5%; return on equity fell to 14.2% from 16.8%.

• Dividend of €0.70 per share approved, up 7.7% year-over-year.

Segment performance

• IT System House & Managed Services: Revenue down 3.3% to €1,851.9m; EBIT down 14.5% to €105.1m; margin at 5.7%.

• IT E-Commerce: Revenue down 0.6% to €1,126.4m; EBIT up 17.8% to €63.7m; margin improved to 5.7%.

• International revenue grew 2.9% due to acquisitions, while domestic revenue declined 5.7%.

• Software business outperformed hardware, but revenue recognition rules understate this growth.

• Acquisitions supported positive growth abroad.