(News Bulletin 247) – The quarterly activity of the Luxembourg company specializing in technical services for new technologies was once again driven by excellent dynamics in the Benelux. The management of Solutions 30 wanted to be reassuring about the future direction of margins after a disappointing first half in this area.

Publication after publication, Solultions 30’s choice to concentrate its strengths on the Benelux, the region which brings together Belgium, the Netherlands and Luxembourg, is bearing fruit.

The excellent growth achieved in this geographical area has enabled the company specializing in technical services for new technologies to achieve very good activity this summer. Between July and September, the Benelux more than increased the group’s activity, with purely organic growth of 67% to 89.6 million euros.

Solutions 30 has once again benefited from the deployment of optical fiber in the region, which allows it to benefit “fully from the strength of this market”. Activity in the area was also supported by the continued deployment of smart meters in Flanders as well as the start of new contracts in activities linked to new energies and electric mobility.

Accounting for 40% of the group’s overall billings, Solutions 30’s activity in France is experiencing limited growth. The company’s turnover increased slightly by 1.7% year-on-year (+0.2% organically) to reach 98.4 million euros between July and September 2023. The scheduled end of deployments of smart meters is still not offset by the rise in activities linked to the energy transition.

“The Benelux continues to boost sales and compensates for the stability of France in the third quarter,” underlines TP ICAP Midcap in its note dedicated to Solutions 30.

More contrasting situation in the rest of Europe

In the “other countries” zone, which excludes the Benelux and France, the group recorded a turnover up slightly by 1% to 62.7 million euros over the quarter. A performance which constitutes “a slight disappointment” for TP ICAP Midcap. Solutions 30 is indeed experiencing mixed fortunes, in this area bringing together Germany, Italy, the Iberian Peninsula, Poland and finally the United Kingdom.

In Poland, Solutions 30 is doing very well and achieving growth of 48.8%, thanks to market share gains recorded in the Warsaw region and the dynamism of “mobile” activities. In Germany, activity is stable at 16.4 million euros. But it is expected to make significant progress, with the signing of major deployment contracts in the coming weeks. “The start of the German market is underway with major contracts to come,” specifies Christel Cleme, the analyst in charge of covering the stock.

“These contracts are highly strategic for the group because the German market has the greatest potential in Europe, with only 4 million households subscribing to fiber representing less than 10% of the total number of German households,” underlines Solutions 30, which specifies that they should “ensure the group’s next growth drivers, after the Benelux” and thus “guarantee strong organic growth and therefore better visibility”.

In total, Solutions 30 published quarterly turnover up 18% year-on-year to 250.7 million euros, compared to 212.4 million euros for the same period of the previous year.

On the Paris Stock Exchange, this publication is acclaimed Solutions 30 shows one of the strongest increases on the Parisian market. Its stock rose 5.9% around 10:00 a.m. and gained up to 14.6% in early trading Thursday morning.

A reassuring speech on the margins

This good start to the year reinforces Solutions 30 in achieving its annual objectives. The group still intends to achieve “double-digit growth”, allowing it to exceed the “symbolic milestone” of one billion euros in turnover in 2023. This level of growth would reflect growth above 10%.

Regarding the direction of its margins, the management of Solutions 30 wanted to be confident after the immense disappointment caused after the publication of the first half accounts. Over the first six months of 2023, the group experienced numerous difficulties in recovering its profitability with an operating margin which then fell from 6.7% in the first half of 2022 to 5.3% of the figure. business at the end of June 2023.

This time, Solutions 30 is making an offensive speech on the recovery of margins, a point which is closely scrutinized by the market. The company says it is working on “optimizing its service portfolio and restoring its margins towards a two-digit Ebitda (gross operating profit) margin level under IFRS standard”, authorizing it to count on an Ebitda margin “which will continue to increase” in the second half.

In France, the group recalls having implemented an action plan intended to restore margins. “The first effects of this plan were felt in the first half of the year and they should continue over the coming quarters,” indicates Solutions 30. In the Benelux, Solutions 30 expects a rebound in its margin in the second half after it was “temporarily impacted” by the very strong growth in the first half.

“Finally, in other countries, the group has chosen to refocus on the most profitable segments, which explains the weak change in sales in the third quarter in particular,” notes TP ICAP Midcap.

No dilutive financing coming

Solutions 30 also gave some indications to the market on the direction of its operating margin for next year. The group in fact anticipates a return to a double-digit Ebitda margin during the 2024 financial year, “subject to the scale of start-up costs in the German market”, specifies the financial intermediary. The latter thus maintains at this stage its cautious estimates of operating margin of 6% in 2023 and 8% in 2024.

“Finally, an update was made on the group’s financing after the occasional pressure on cash generation in the first half of the year. Management thus clarified that the situation is recovering: self-financing is the basis of the group’s development in parallel with recourse to factoring. No dilutive financing is envisaged”, appreciates TP ICAP Midcap.

“The opening of the German market is good news, as is the reassuring speech on margins and financing and the desire of management to return to more active investor communication (webinar on the development model planned for December and Capital Markets Day in May)”, appreciates Christel Cleme. So many elements “which could support the recent rebound in the price (+9.2% over one month, Editor’s note) and confirm the analyst’s buying opinion. She gives Solutions 30 a price target of 3.2 euros , which shows an upside potential of 64% at current prices.