Lectra : Strong growth in Q1/2022

Strong growth in Q1/2022

(Source: Pexels)
(Source: Pexels)

From February 24 onwards, the 1st quarter of 2022 (Q1/2022) was marked by the war in Ukraine. As soon as the war began, Lectra SA, Paris/France, decided to cease its operations in Russia, by suspending the activity of its subsidiary Lectra Russia (which has a workforce of 5) and stopping all deliveries of products or services. The company’s direct exposure to Ukraine and Russia is low; the contribution of these 2 countries in 2021 accounted for less than 1% of sales. 

In this peculiar environment, Q1/2022 sales amounted to €122.0 million, up 83% compared to Q1/2021. EBITDA before non-recurring items totaled €21.6 million, up 90%, and the EBITDA margin before non-recurring items was 17.7%. 

Income from operations before non-recurring items amounted to €14.4 million (Q1/2021: 8.5 million), up 71%. This includes a €2.7 million charge for amortization of intangible assets arising from the acquisitions of Gerber, Neteven and Gemini. Net income totaled €9.3 million (+55%). 
The war in Ukraine and the lockdown measures in Chinahad a negative impact. Despite that geographically, orders for perpetual software licenses, equipment and accompanying software, and non-recurring services increased by 29% in Europe, 20% in the Americas and 91% in the rest of the world (including Northern Africa, South Africa, Turkey, and the Middle East). Orders decreased by 8% in Asia-Pacific. 

The climate of uncertainty surrounding the conflict in Ukraine caused some of Lectra’s customers to postpone investment decisions, starting in late February, especially in Europe. This war has also accelerated price increases, energy shortfalls, and shortages in some raw materials. The impact of these inflationary factors on the company’s financial statements should remain limited, due to low exposure to energy costs and to the prices of those raw materials affected the most. 

At the same time, lockdown measures implemented by the Chinese government, which became even stricter in late March, had a negative impact on orders in China. Those measures also prevented shipment of €3.5 million worth of orders for CAD/CAM equipment, which had a negative impact of the same amount on Q1 revenue. 

Together with the particularly strong order backlog on March 31, 2022, these elements reinforce Lectra's confidence in the ability to achieve its objectives for the current financial year. However, the consequences of the war in Ukraine and the strict lockdown measures in China remain uncertain and could adversely affect the company’s business and results for the remainder of 2022. 

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