(News Bulletin 247) – The Luxembourg company specializing in technical services for new technologies has indicated that it is targeting a double-digit operating margin in the 8 countries where it is present. Announcements regarding its financing plan are also appreciated.

Like fiber, Solutions 30’s growth is going fast. So much so that the company will exceed the threshold of one billion billings at the end of the year which is about to end. Solutions 30 can count on the excellent dynamics of its activity in the Benelux, having once again benefited from the deployment of optical fiber in the region which includes Belgium, the Netherlands and Luxembourg.

On the other hand, the bottom of the income statement is struggling to follow such a positive trend. Last year, the company’s profitability suffered, penalized by a sharp deterioration in market conditions in France. And in the first half of this year, the recovery in margins compared to the last six months of 2022 turned out to be weaker than expected. A disappointment which had not failed to be sanctioned by the market on September 22.

Towards double-digit margins

On the sidelines of its third quarter activity update, Solutions 30 then made a decidedly more offensive speech on this recovery in margins, a point which is focusing the market’s attention. The company then said it was working on “optimizing its service portfolio and restoring its margins towards a two-digit Ebitda margin (gross operating result) under IFRS standard”, authorizing it to expect an Ebitda margin “which will continue to increase” in the second half.

This Wednesday, Solutions 30 gave more indications on its margin objectives. The former PC30 intends to rely on a “clear and targeted operational strategy” to improve Ebitda margins towards “a double-digit rate” in the 8 countries where the company is based. Achieving this objective will involve optimizing costs and diversifying activities in France and the Benelux.

In Germany, Poland and the United Kingdom, the company is counting on an increase in activity, accompanied by strict cost control, while in Italy and Spain, it wishes to concentrate its forces on the most profitable contracts and on “the flexibility of the cost structure”.

The company had already indicated in November that it anticipated 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”, TP ICAP then specified. Midcap in its note devoted to the quarterly activity update of Solutions 30. And the financial intermediary had at the same time reiterated its prudent estimates of operating margin of 6% in 2023 and 8% in 2024.

A corset of debt set to loosen

In parallel with this recovery in margins, the company intends to impose financial discipline, particularly with regard to its debt. Solutions 30 says it has a “solid” financial situation with a net debt/Ebitda ratio of 1.7x as of June 30, 2023. It specifies that this ratio is well below the 2.5x threshold of its banking covenants.

This net debt/Ebitda ratio should therefore reach a peak at the end of 2023, specifies Solutions 30, which adds that it will remain “significantly lower” than the ceiling of 2.5x. This ratio is expected to observe a regular decline from the 2024 financial year, Solutions 30 also suggests.

To finance its organic growth, the company estimates that the cash flow required to finance 500 million euros of additional turnover is only around 35 million euros.

Here too, an update was made by Solutions 30 in November on its financing. Management had “thus clarified that the situation is recovering: self-financing is the basis of the group’s development in parallel with the use of factoring. No dilutive financing is envisaged”, also appreciated TP ICAP Midcap.

On the Paris Stock Exchange, Solutions 30’s announcements concerning its financing plan and actions to improve its margin are welcomed. The title of the ex-PC30 displays one of the best performances of the SBF 120, namely a gain of 5.7%, around 10:30 a.m. The increase therefore brings Solutions 30’s annual gains on the stock market to more than 40%.