Deputy CEO, Alten
bbenoliel-alten-resultats-2011.mov
Interview de Bruno Benoliel (Directeur Général Adjoint en charge des finances) sur Labourseetlavie.com à l'occasion de la ...
About Bruno Benoliel
Bruno Benoliel, Deputy CEO at Alten, discussed the company's 2011 results in a September 2011 interview. He stated that annual activity grew by 16.3%, with a slowdown in late 2011 linked to client uncertainty about the economy, particularly in the finance sector. He noted that sectors like aeronautics and automotive drove business, and that despite concerns about a French automaker's restructuring, automotive projects continued in Germany and Sweden. Benoliel said the main challenge for 2012 was maintaining margins, as structured purchasing in France creates permanent pressure on prices and margins, which he argued cannot be addressed indefinitely through salary constraints given the need to recruit high-level engineers, but rather through project organization and productivity gains. In a separate interview from 2008, Benoliel commented on Alten's 2007 results, noting a 22% increase in activity but a decline in net profit due to goodwill impairments. He stated the company aimed to maintain margins around 12% in 2008, despite factors like wage increases and pricing negotiations. Benoliel also described Alten's acquisition strategy as having a dual logic: geographic expansion abroad and positioning in new business lines to complement existing ones.
Transcript (17 segments)
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Interviewer0:00
Bruno Benoliel, hello hello. Deputy CEO in charge of finance. We will review with you the results of Alten and the outlook for this year. If we return to the year 2011, activity up 16.3%, can we say that over the whole year, activity was the production of activity?
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Bruno Benoliel0:17
Yes, over the whole year, activity showed a slowdown nevertheless at the end of the year, probably linked to the questions our clients had about the economy in 2012, more marked in the finance sector, which will not surprise you, but generally a satisfactory activity with client meetings and sectors that drove business, such as aerospace or even automotive. We put the weekend where we had perhaps concerns about this year, 2011 was not the case, so it was not the case. You have heard about ongoing restructuring at a French manufacturer that we support, since we are referenced for 2012 in the transformation of its work organization on R&D projects. Except for that manufacturer, projects in automotive continue, notably in Germany and Sweden. We have many requests from manufacturers. On the net income side, excluding certain items, but to think more and more about this net income, there were restructuring effects that meant it did not show the expected progression. In fact, the operating income from activity, which measures the company's performance, was in line with or slightly above analysts' expectations, since we had a satisfactory year. So the net income, as you know, includes a number of exceptional charges that indeed weighed on the result to the tune of 9 million euros, and for entirely exceptional items that are by nature non-recurring.
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Interviewer1:43
You were talking about two countries where there is indeed international, there were strong growths, we saw Germany and the Netherlands, Sweden, the dynamism, and what is driving it in these countries?
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Bruno Benoliel1:53
Northern Europe overall is more dynamic than Southern Europe, I would say France is also in Southern Europe. In Sweden, our activity was driven by automotive activities with Volvo, heavy truck engines, but also telecom and energy. In Germany, salary, nautical and automotive strongly drove growth, and in Holland, electronic components were present and invested heavily last year. In periods like how we are going through, cash management is important between this activity growth and the working capital requirements. Yes, cash is a permanent concern. We must work, we must invoice well, we must also collect well. Companies are also valued on their ability to generate cash. Indeed, for several years we have focused on collection and financial efficiency. In fact, customer payment terms have been continuously decreasing for three years, and they have decreased significantly again in 2011.
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Interviewer2:59
A word on your salary environment, since you recruit engineers, we see the progression between 2010 and 2012 arriving at 14,800 people for the Alten group. The salary environment remains tight, it's difficult to recruit engineers, there is competition in the market.
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Bruno Benoliel3:10
Yes, there is competition in recruitment, competition from our own clients who also recruit for their own needs and also have to face retirements, competition from our direct competitors in the outsourced R&D market, tensions on salaries yes because engineers are in demand, there are fewer of them, especially in sought-after activities, I think particularly of engine environments or everything related to telecoms where resources are rarer, we see tensions on salaries.
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Interviewer3:47
What can we say about the activity rate? It is rather stable, that's a good thing in the context. Maintaining this activity rate, we have an activity rate that is satisfactory. We thought there would be an inflection at the beginning of 2012 because we all anticipated a slowdown, finally this slowdown did not happen and our activity rate remains at a satisfactory level, since it is above 92% when we think of previous crises. So at a somewhat difficult time, somewhere when it calmed down, can we stop abruptly? We cannot say that you were warned early enough, that is to say that it happens from one quarter to the next, such and such a manufacturer, such and such a sector, it comes suddenly when there is really a slowdown.
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Bruno Benoliel4:27
So it comes more or less abruptly. Our sector of activity, generally, is affected rather late, since companies tend to decelerate their R&D investments as the economic cycle declines. It's true that 2009 was extremely particular in this regard, since we had a brutal stop essentially in automotive. Usually, we see things coming. And regarding sales prices, we have the impression that they remain under pressure, but it advances and is linked to the environment. You don't imagine clients are relaxed on that side.
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Interviewer4:52
Indeed, the pressure on you will continue, I would say this environment.
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Bruno Benoliel5:03
So, in fact, clients ask us for productivity gains. Productivity gains can be effective price reductions. There are still sectors of activity where we have gone to the end of the logic of price reductions, because behind we have to pay people, train them and recruit them. And the logic of productivity gains also translates into changes in the offer. Indeed, for several years, we have been witnessing the consulting mode giving way to what is called work packages, globalized projects in which we take charge of the realization of the project in its entirety with our own management, our own working methods and organization, our own technical supervision, which allows us generally to achieve productivity gains of 5 to 10%. And so that means a particular organization within Alten to respond to these calls. Exactly, a structuring of the technical direction that has been growing in strength in 2010 and especially 2011, which is precisely there to meet client needs.
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Interviewer5:57
In recent months, you have also carried out quite targeted acquisitions, whether in the United States or in other countries, in Germany. What do they respond to? Positioning on markets or with players that have strong skills?
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Bruno Benoliel6:12
In fact, we have a dual logic: both a logic of geographic expansion — you will notice they are all abroad where we need to accelerate Alten's development — and they also respond to a logic of positioning on businesses that complement the existing businesses in the countries where we are making acquisitions. In this context we have discussed, you remain, I would say, on the lookout for opportunities, but rather on targets like those that have been realized in recent months. In fact, we are quite opportunistic in our approach, even though we have strongly rationalized the external growth process. We are essentially looking for companies rather abroad, complementary to our businesses as I explained, or existing market positions, and companies of either modest or small size, depending on what we find, or even more significant companies that would allow us to make a bigger leap and go faster in growth.
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Interviewer7:04
So we were talking about the situation in Europe. It's true that we discuss every day the economic questions of the euro zone. When we see what is happening in Northern Europe in 2012, there seems to be growth in those countries. You have envisaged, effectively, good growth in activity?
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Bruno Benoliel7:23
We are almost sure we will have double-digit growth in Northern Europe, because our companies, our subsidiaries, are positioned in markets where we have a bit more visibility, such as aeronautics, obviously, but also automotive in the accounts of Northern Europe, which gives us a longer-term development perspective compared to what we can have in France, for example.
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Interviewer7:42
In conclusion, the main difficulty of this year 2012 is not necessarily activity, but rather the maintenance of margin. Is that the question?
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Bruno Benoliel7:50
The challenge is the maintenance of margin, because in France, where purchasing is extremely structured and extremely strong, we are in a permanent search for productivity gains, which will necessarily weigh on margins and prices. It will be up to us to provide an answer. We cannot indefinitely understand, it's salaries, since as we mentioned, we must recruit, recruit, recruit high-level engineers. On the other hand, it is in the organization of project modes that we will be able to respond to productivity gains and try to maintain margins in France. What is also probable is that the market mix will depend on the group's evolution, and the group's deployment internationally will probably compensate for the margin slippage in France.
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Interviewer8:29
Thank you for taking stock with us on these results, Bruno Benoliel. As a reminder, you are the Deputy CEO in charge of finance of Alten. Thank you.