European digital services group SQLI today announces its consolidated turnover for the first half of 2020*, marked by the health crisis and a severe market downturn, particularly in France.
For the first half ended 30 June 2020, turnover fell 10.3% to €110.3m (down 13.3% at constant consolidation scope and exchange rates**). As a result of the management measures put in place, the Group expects to achieve a positive EBIT for the first half.
>50% of revenues generated by Commerce & Experience
The Commerce & Experience business segment, which comprises the European digital agency operations, posted growth of 5.7% in the first half of 2020. With €55.8m in turnover, it was the largest business segment (51% of revenues).
This performance includes a €2.4 million contribution from Redbox Digital, an e-commerce agency based in the UK and Middle East consolidated since 1 March 2020. This instantly accretive acquisition increases SQLI’s growing international presence, complements its portfolio of key accounts (including AXA Insurance, Nahdi Medical, Nespresso, Fortnum & Mason and Universal Music Group) and enables SQLI to become one of the 10 “Global Elite Partners” of Adobe/Magento, the world’s leading e-commerce platform.
Although revenues were inevitably impacted by the lockdowns in the second quarter, Commerce & Experience managed to deliver a number of key client wins (including Boulanger, Brutélé, Carlsberg, Colruyt and Soufflet) and secured a new contract with Nespresso, one of its top clients.Meanwhile, Digital & Technology turnover fell 22.4% to €54.5m in H1 2020. The impact of the health crisis was particularly severe for clients in aerospace which is an important sector for the Group and accounting for nearly half of the decline in turnover.
In addition to the effect of the economic downturn, turnover was also negatively impacted following a streamlining of the offering and the discontinuation of loss-making activities in the second half of 2019.Despite this backdrop, Digital & Technology managed to acquire a number of key clients over the period (Clinique Pasteur Toulouse, Ecoles Nationales Vétérinaires, Legrand and Tarkett in particular) and has commercial opportunities in its Certified Training offering.
>50% of workforce outside France
The Group has taken the necessary measures to mitigate the impact of the situation on its results, in particular via partial unemployment mechanism for around 30% of its employees in France, adjustments within its base of subcontractors, and a hiring freeze.As at 30 June 2020, SQLI employed 2,164 people (excluding interns), versus 2,191 as at 31 December 2019, 51% of whom are based outside France. The service centre based in Morocco alone has some 480 individuals, with a high utilisation rate of 83%.
Trends and outlook
Thanks to the strong performance by Commerce & Experience abroad, and despite the impact of the health crisis on Digital & Technology in France, SQLI expects to achieve a positive EBIT in the first half of 2020. At the same time, the Group has obtained a €25m PGE state-guaranteed loan with five banks to strengthen its liquidity position.The Group will provide an update on its outlook for the end of the year in the presentation of its H1 results, amid the ongoing health crisis and economic uncertainties.
SQLI will publish its H1 2020 results on 24 September 2020 after close of trading.