(News Bulletin 247) – The digital services company is revising downwards its 2024 growth targets, on the sidelines of the publication of preliminary results for the first half. Sopra Steria mentions a climate of uncertainty in France but also difficulties in the aeronautics sector and the postponement of a major contract in the United Kingdom.

Along with video game publisher Ubisoft and specialist in key technologies for the manufacture of vaccines and medicines Sartorius Stedim Biotech, Sopra Steria has also disappointed the market with a lowering of its growth prospects.

The digital services company explains that it has been put in difficulty by various “exogenous elements” that appeared in June. It points in particular to an increase in “the climate of uncertainty” in France, causing a “significant slowdown in decision-making” [ses] clients”.

The company also cites the “temporary” delay of a “significant” contract in the United Kingdom, the positive contribution to growth of which is now forecast by Sopra Steria for 2025.

Market conditions are becoming more complex

However, from a geographical point of view, France and the United Kingdom are Sopra Steria’s two largest markets, representing 41% and 16% of revenue respectively, according to the group’s 2023 annual report.

From a sectoral perspective, the group is experiencing headwinds from the aeronautics sector, which is experiencing “short-term difficulties in ramping up production”, which is penalising order intake. However, this sector represented 25% of Sopra Steria’s total turnover in 2023.

Sopra Steria does not mention the European giant Airbus by name. It is Invest Securities that puts us on the trail, specifying “the difficulties of Airbus”, in its commentary, cited as the third reason for the IT services group’s setbacks, in addition to the “context in France” and the delay of “an important contract” in the United Kingdom.

At the end of June, the European aircraft manufacturer had indeed seized up the market, by lowering its forecasts for deliveries, operating results and cash. Airbus explained that it was encountering difficulties in its space division and a resurgence of tensions in its supply chain in commercial aviation.

These are all factors that hinder Sopra Steria’s ambitions, and which do not allow it “to envisage a significant increase in the level of growth in the second half of the year”. “It is above all the absence of a rebound in organic growth in the second half of the year that explains this warning”, says Invest Securities.

2024 turnover “roughly stable”

Taking these adverse elements into account, the company is therefore aiming for a turnover that is “roughly stable” in organic variation, compared to the 5.805 billion euros in 2023.

The company had previously anticipated annual organic revenue growth of between 2% and 4%. However, the growth projections made by Sopra Steria at the beginning of the year were already considered “cautious”.

The operating margin rate is expected at 9.7%, i.e. in line with expectations and the annual target of “between 9.5% and 10%”, announced at the start of the year.

Sopra Steria has updated its targets alongside the publication of its preliminary results for the first half of the year. It expects to generate revenue in the first half of 2024 of €2.95 million, representing total growth of 3.8% and organic growth of 0.3%.

The operating margin rate is estimated at 9.7% over the period, which represents an increase of 0.9 points (0.9 percentage points) over one year. The impact of the classification of Sopra Banking Software’s activities as assets available for sale is estimated at +0.5 points (+0.2 points on an annual basis). Sopra Steria will reveal its final results for the first half of the year on 24 July after the stock market closes.

On the Paris Stock Exchange, the stock fell by another 7.7% to 174.50 euros, around 2:40 p.m. after having dropped more than 10% in the morning. In its wake, Alten shares fell by 5.3%, the outsourced R&D group being, among other things, exposed to the aeronautics sector.