In Q1 2020 the Comarch Group generated sales revenue in excess of PLN 377.8 M, which marks an increase of PLN 39.1 M in comparison to the figure generated in the similar period last year. The operating profit grew by PLN 23.9 M amounting to PLN 44.9 M. The net result attributable to shareholders of the parent company stood at PLN 14.2 M and was up PLN 7.2 M on the Q1 2019 figure. Volatility of foreign exchange rates observed in March 2020 had a significant impact on the achieved performance.
EBITDA went up by PLN 25.5 M year on year to PLN 66.8 M. During the period, operating profitability stood at 11.9 percent, with net profitability amounting to 3.8 percent.
The Comarch Group’s good financial performance was a result of growing foreign sales that were achieved mainly through increased sales of IT solutions for telecommunications, financial institutions, and the trade and service sector, as well as industrial companies in European countries and Asia. The level of revenues was impacted by PLN weakening against major foreign currencies had and positive exchange differences relating to revaluation of receivables amounting to PLN 18.7 M.
Comarch showed good financial performance in Q1 2020. An impact of the Covid-19 epidemic on the Company’s operations in Q1 was limited to the last two weeks of March. A much bigger impact of the epidemic effects is felt in Q2, with a downturn seen in current sales and attracting new contracts. Both product and sector-related and geographic diversification helps us in conducting business under current conditions. An expanded sales structure and a rich product offering allows us winning and implementing contracts on many foreign markets. Some of the offered solutions enjoy increased interests at the time of the epidemic, such as for example, telemedical solutions or electronic invoices. Such a business model provides for stability and secure operations in the case of a volatile macroeconomic situation in Poland and world-wide. It’s of particular importance when faced with the spread of the Covid-19 pandemic and economic consequences caused by it. The Group continues developing new products, and also expands its business in foreign markets, thus investing in increasing its business diversification of and building a competitive advanced in the future, says Konrad Tarański, Chief Financial Officer and Vice President of the Management at Comarch.
The largest sales increase was seen in the sector of finance and banking, where customers purchased products and services worth PLN 57.2 M, or PLN 15.2 M more, i.e. 36.2 percent up on the figure generated in the previous year period. That increase was mainly driven by higher sales in the European and Asian markets. Owing to active business operations, including the Asian market, sales revenue to customers form the telecommunications sector grew the value of which amounted to PLN 97.0 M, marking a PLN 13.7 M increase, or 16.4 percent growth in comparison to Q1 2019. Sales of ERP solutions to small and medium-sized enterprises in Poland grew by 1.6% achieving an amount of PLN 45.5 M. As concerns sales to SME customers in the region of DACH, growth of revenue stood at PLN 6.2 M, i.e. up 28.2 percent.
The Group also posted increased revenue from sales to customers from the sector of trade and services. The value of contracts with enterprises from that segment amounted to PLN 57.0 M, or PLN 0.9 M more when compared to Q1 2019. In the case of customers from the industrial sector revenue grew by PLN 9.2 M, or was up 22.9 percent.
Revenues from sales to public entities recorded a drop of PLN 6.7 M, or 18.2 percent, which was due to decreased deliveries of third-party software. Sales to customers from the medical sector went up PLN 0.4 M, or 5.3 percent up reaching PLN 7.3 M.
Comarch actively seeks new sales markets and business growth opportunities. In April 2020 the Company acquired France’s 2CSI, a company that specialises in delivering IT solutions and services to medical business in the French market.
Through this acquisition Comarch has strengthened its position in IT services for the medical sector. For over ten years we have been heavily investing in the development of IT solutions for health care entities, spending over EUR 100 M for that purpose. We’re convinced that the segment is future-proof because of a number of reasons, such as, for example, a demographic structure and a scarcity in medical staff. The current situation related to the coronavirus pandemic has revealed weaknesses of health care that requires substantial financial spending, among others, to develop telemedical services, claims Konrad Tarański.
Operations in the times of Covid-19
The Comarch Group is well prepared to operate under an expected economic slowdown caused by the Covid-19 pandemic and its business has continued without disturbances. Continuity in customer service has been ensured in all functional areas, and remote means of communications have been used in business contacts. Currently, a clear majority of those employed in the Comarch Group has been working remotely. Depending on developments of the epidemic situation a gradual return of the employees to their offices is planned, while observing the guidance of the Chief Sanitary Inspector, the Ministry of Health, and other state authorities.
A good financial standing allows us maintaining our headcount, too, and follow the assumptions of the HR policy. In Q1 2020 we increased our headcount and presently there are 6,372 persons working across the Group’s structures. We’re also launching an annual summer holiday recruitment programme for students of IT and similar faculties, adds Konrad Tarański.