EuroBusiness Media (EBM): Altran, a global leader in engineering and R&D services, has just held its Investor Day. Dominique Cerutti, bonjour.
Dominique Cerutti: Bonjour, hello.
EBM: The market vision you communicated back in 2015 has been proven right…. you identified some game-changing trends. Are there any major developments?
Dominique Cerutti: In fact, we are rather seeing an acceleration versus what we have signalled in 2015. The market is set for significant growth, 8-9% globally, making our addressable market around €240 billion by 20/22, and if I make a long story short, I would say that this market is characterised by four key trends.
Number 1, avalanche of disruptive technologies. Two, there is a significant mismatch between supply/demand of talent for the clients, the talents are not where the clients are. 80% of the engineers of the PEG of the planet come from Eastern Europe or Asia and that’s not where the clients are. Three, there are some areas that are for us high growth and challenging for clients, namely software engineering because that is new news for the clients or the pervasivity of semiconductors. Four, and that is more and more obvious, the clients, because of all those pressures, are adopting a radical and rational approach to the sourcing of their strategy.
They are not any longer trying to find partners with a one-size fit or model, they are trying to find people that are global, like us, and helping them to differentiate in the early stage of their incubation. So it requires tip-top expertise and intellectual property. We call that high value. Second, as always, they of course expect people that can help them deploy at scale and get their engineering done. We call that mainstream business. And they also now expect people that can help them optimise the cost of their R&D through access to global shore and industrialised centres.
EBM: Can you talk us through the key highlights of your strategic plan?
Dominique Cerutti: Our strategic plan has three axes. The first is that we want to deploy a best-in-class service model to best serve clients. Two, we want to address more aggressively high growth industries where clients expect us to be very good. And three, we want to demonstrate our leadership in the USA. If I elaborate just a little bit the three axes. By best-in-class model what I mean is the following: Over the last three years we have built a €400 million high value business with iconic brands, working in synergies around the globe for all clients and we want to grow this business 8 to 10%, meaning very fast, and help clients to differentiate and accelerate their innovation – number one. Two, we are going to press on on what we call the mainstream business, to help clients deploy at scale and get things done. And three, over the last three years as well, we have built a 16,000 workforce in four global delivery centres and this is massive to help clients optimise the costs of their R&D. Centican?, we are going to deploy that even faster, almost double digit.
In terms of high-growth industries, without being long, I will name two of them. Software engineering, because the planet is becoming digital, so clients are expecting us to help them get that done. Semiconductor or silicon is becoming pervasive because its oldest mark device proliferating everywhere, so that’s our core industry and we are going to deploy that and invest more aggressively. And third, what I said on USA leadership, we have built over the last three years the first franchise in the USA and we are now delivering a top line in excess of $8,000 million. It’s a multi-industry ER&D services company and we are going to press on and deploy that to go help clients and of course create top line and shareholder value. That is the essence of the plan and we strongly believe that it’s matching client demand.
EBM: So, how will that translate into financial objectives?
Dominique Cerutti: Of course, the plan aims at serving clients and trying to be best-in-class in doing that but also to deliver superior shareholder value. The name of the game here is profitable growth and deleveraging. We intend to grow organically, like-for-like, the top line from €2.9 billion to €4 billion by 2022, number 1. We expect to bring the operating margin to around 40.5% by 2022, which would be best-in-class worldwide. We have a very solid cash flow generation helping us to deleverage accordingly to plan and we expect to double the EPS versus 2017 by 2022. So that is the essence of the plan that we will achieve.
EBM: And what makes you confident that you can execute?
Dominique Cerutti: I would say three key factors. One, as you know, we have just acquired Aricent and it’s making us the global leader, but more than that, for the four key attributes that matter for clients, we are number 1 in that scale. By that I mean we are global leaders in the USA and in Europe and with a significant reach. Two, we are leaders in all industries where we operate. Three, we master horizontal domains, for instance design with the iconic brand Frog. And four, we are leveraging a superior global delivery which is second to none. So, that is really powerful, that’s what clients want, that makes me confident.
Second, I would say it’s my leadership bench, that’s my team. It’s a very diverse, seasoned team., with decades of experience in large-scale operations, in transformation and in delivering value. Again, my team is impressive, I’m really proud to be part of that. Third, is that we are focusing on derisking our execution. We are no longer in transformation, we are in execution. We have a plan to take Aricent and Altran together, which we call convergence, it’s phased, it’s focused and it aims at delivering the synergies and focusing on operational excellence. So, all that is making me very confident. And if I would conclude, I would say that we are not simply taking the low road. We are taking the high road.
EBM: Dominique Cerutti, Chairman and CEO of Altran, thank you very much indeed.
Dominique Cerutti: Thank you so much.
