Hungary’s 4iG posts strong Q2 result
Rising revenue and profit
Net sales revenue in Q2 was HUF 11.6 billion, 19% higher than a year earlier, with H1 revenue of HUF 20.3 bn, up 39% year on year. Revenue growth in the first half was purely organic, largely owing to the performance of the company’s software development and outsourcing business. Revenue from ongoing contracts contributed 16% to the total in H1 2020, up from 10% a year earlier, while revenue from development, outsourcing, support and consulting rose from 16% to 36% within the total, 4iG said.
Export sales revenue decreased from HUF 352 million in H1 2019 to HUF 324 mn in the first half, with nearly the entire amount from European Union countries. The sales revenue of the group shows within-the-year cyclicality, 4iG said, adding that sales are lower in the first and third quarters, somewhat higher in the second quarter and strongest in the fourth quarter when 40% of annual sales are being realised.
The volume of market-based and government orders has grown further this year and contracts for 2020 were at HUF 20.8 bn by the middle of August.
EBITDA was up 49% year on year in Q2 at HUF 782 mn and was 35% higher in H1 at HUF 1,4 bn.
Total comprehensive income was HUF 463 mn, 55% higher than a year earlier, with profit of nearly 775 mn in the first half.
Coronavirus impact
“As expected, COVID-19 slow-down influenced the 2020 H1 financial results by a moderate extent,” management said in the results presentation. Customers maneuvered their spending towards remote technologies and cyber security solution that could mitigate downturn in the backlog. In order to maintain operational cost, agile methodology has been adopted and the resource yield has been enhanced, 4iG said. Management confirmed its previously announced financial guidance unchanged.
Short-term outlook
- 4iG’s goal is to become the number one IT systems integrator within the next two years, the statement said.
- The group has a contracted backlog of HUF 20.8 bn for 2020 as of 14 August.
- Management projects topline growth of more than 20% this year and more than 10% average annual growth rate beyond 2020.
- 4iG is targeting an EBITDA margin of 8 to 10% in the medium term.
- The board approved a dividend for 2019 at HUF 22 per share, representing a 4.3% dividend yield. The dividend will be paid in September 2020.
Acquisition plans
4ig aims to consolidate its position in Hungary and invest into new technologies and enter into new sectors, today’s statement said. The company is looking at potential acquisition targets in Central and Eastern Europe. Acquisitions will be financed through a combination of external financing (bonds and loans) and the company’s own cash resources. 4iG also plans strategic partnerships and joint ventures with European or overseas
Stable share price
4iG shares rose 0.4% today and have lost 1.4% this year.
4IG
