Indra’s 9mths’17 Results In Line With Expectations Thanks To Tecnocom

Indra results in 9mths'17Indra results in 9mths'17

Indra posted net profit of 85 million euros in the first nine months of 2017, up 76% from the 48 million euros registered a year earlier.

The number of contracts obtained grew 13%, thanks to the incorporation of Tecnocom and organic growth in Indra’s IT business (4%).

EBITDA rose 13% to 171 million euros, while the EBITDA margin stood at 8.1%, up from 7.7% a year ago (8.5% excluding the costs of integrating Tecnocom).

The operating synergies announced at the time of the acquisition (30,5 million euros) are being obtained at a faster rate than planned and at a lower cost than initially estimated.

Net debt fell 9% in Q3’17 to 680 million euros, although that level is 30% higher than in December 2016 due to the purchase of Tecnocom.

Bankinter analysts flag that the growth in revenues in the IT division is positive, as well as the good performance from the EBITDA margin.

“That said, we believe the market’s reaction will be neutral given that the company’s indebtedness (2,5x in terms of Net Debt/EBITDA 2017e) is still much higher than other companies in the sector. Furthermore, the Transport and Defence business remains weak (a decline of 4% in revenues and in the ratio book-to-bill from 1,06x to 0,92 times.) For that reason, we think there should be some consolidation in the stock price levels up until the company’s Investor Day on November 30. The company could provide guidance regarding debt reduction and dividend recovery from 2018.”

In Link Securities’ opinion “it seems that Indra is doing its homework as regards the restructuring of its business and the integration of Tecnocom.” The analysts add:

“But growth is far from what we had predicted. We hope that in the medium term the favourable opportunities for growth in the sector will translate into an increase both in sales and margins. But we have to revise our results forecasts downwards, as we already announced after the presentation of H1’17 results.”

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