Lectra remains confident in its medium-term growth prospects
The Board of Directors of Lectra, chaired by André Harari, reviewed the consolidated financial statements for the first half of 2008, after a limited review by the Statutory Auditors.
Q2 2008: Orders and Income Decline The macroeconomic environment continued to deteriorate worldwide, and, in this context, orders for new software licenses and CAD/CAM equipment relative to Q2 2008 showed a decline of 26% (€7.8 million) overall compared to Q2 2007.
(Q2 2007 orders comprised the signature of an exceptional €4.2 million contract with a French world leader in luxury goods, for which billing will be spread over the period 2007-2010.) All of the world's regions have been affected by this slowdown.
With an average parity of $1.56/€1, the U.S. dollar was down 14% compared to Q2 2007. This change mechanically reduced revenues by 4% (€2.3 million) and income from operations by €1.3 million.
Q2 2008 revenues amounted to €50.8 million, down 3% relative to Q2 2007. At actual exchange rates they were down 7%. Revenues from new systems sales decreased10%, to €24.6 million, while recurring revenues (€26.2 million) increased 5%.
Income from operations amounted to €1.3 million, down €0.9 million (27%) like-for-like. The operating margin was 2.6%. Net income was €0.9 million, down €1.4 million at actual exchange rates.
Free cash flow was negative at –€0.6 million. There were no non-recurring items. The free cash flow was up by €2.1 million relative to Q2 2007 free cash flow before non-recurring items (–€2.7 million).
First Half of 2008: Growth in Revenues – Income from Operations Improves Sales activity in the first half of 2008 was weak.
A growing number of clients affected by the economic slowdown or concerned about the impact on their own activity postponed their investment decisions in all market sectors and geographical markets.
Overall, orders for new software licenses and CAD/CAM equipment amounted to €41.4 million, down 22% (€11.9 million) relative to the first half of 2007. With an average parity of $1.53/€1, the U.S. dollar was down 13% compared to the first half of 2007. This change mechanically reduced revenues by 4% (€4.6 million) and income from operations by €2.3 million.
Revenues totaled €102.8 million, up 3% like-for-like relative to the first half of 2007. They were down 1% at actual exchange rates. Revenues from new systems sales (€51.2 million) increased by 2%.
Recurring revenues (€51.5 million) increased by €2.2 million overall (4%); this growth, which fell short of the company's expectations of 6–7%, resulted from a rate of cancellations exceeding the statistical record, as a direct consequence of worsening macroeconomic conditions.
Once again, recurring revenues demonstrated, in Lectra's business model, their capacity as a key factor in the company's stability and as a cushion in periods of economic slowdown.
Because first-half 2008 revenues exceed orders booked in the period, the order backlog for new software licenses and CAD/CAM equipment at June 30 (€15.6 million) is down by €4.1 million relative to December 31, 2007.