EuroBusiness Media (EBM): Altran, the global leader in innovation and high-tech engineering consulting, reports results for the first half of 2014. Philippe Salle welcome, you are the Chairman & Chief Executive of Altran. What are your comments, highlights and takeaways from the first half?
Philippe Salle: The first half results are very strong for Altran, despite the environment that is not that good, especially in Europe. We are still facing winds that are quite difficult in some countries, especially in France and Germany in the aero sector, but I would say in the rest of the world – in the US, in Asia, in Northern Europe, and even in Southern Europe – the situation is quite well, and the company is doing very well.
EBM: How do these first half results sit with respect to your 2015 Strategic Plan?
Philippe Salle: We are heading in the right direction. Remember that we have three strategic goals. The first one is to reach €2 billion in sales. We will be close to €1.8 billion this year and it will depend, of course, on the acquisition pass, but we can be close to the target next year. The second strategic goal was to touch 11-12% EBIT in the up-cycle. We definitely think that we will touch the 11% next year, whatever the cycle, which means that we still have some room to improve these results of next year in the coming years. And for the last one, the free cash flow – of course, that is very important – we have already achieved the goal because we are above the 4% threshold already in this first half of the year.
EBM: Could you give us some more colour and commentary about the global business environment for your specialty outsourced R&D?
Philippe Salle: I think the business climate is a little bit better than it was last year. However, it is still not yet at the pre-crisis level. We definitely think that there are some countries where we need better growth in terms of GDP. France, of course, is one market, it’s still 40% of the revenues of Altran, and we definitely think that we can still enjoy more growth in the future in this country. In Southern Europe, the job has been done with the governments, and definitely we are enjoying more growth than in the past and the situation is quite healthy in Italy, in Spain, and in Portugal. In Northern Europe – in Belgium, in the UK, in Scandinavia – the situation is quite well. And, as I said, the US is in a very good position, and Asia also.
EBM: You’ve been quite active recently on the M&A front with back-to-back acquisitions of Foliage, TASS and Scalae. Are you going to give it a rest now or do you intend to continue active M&A, and if so, what types of companies or geographic zones are you targeting?
Philippe Salle: No rest for the company. We will continue this acquisition pass. Last week we already announced new acquisitions in China, and we have 500 people who will join the company by October. We continue to look at specific markets – US, UK, Germany and India for me are the four targets – and also in terms of solutions worldwide; product development, innovative product development (like Scalae and, of course, Cambridge and Foliage) and also the intelligent systems part. That’s exactly what we have done in China. We are looking still at targets in intelligent systems in different parts of the world. So, we will continue the acquisition pass. It could accelerate if we have good opportunities. It could also slow down, but I would say that it’s mainly a question of the quality of targets that we can find on the market.
EBM: After this first half result, what is your outlook for the second half and the full year?
Philippe Salle: The second half will be much stronger than last year. We have a big discrepancy between H1 and H2, also because the number of days is much higher in H2. So, we definitely think that the EBIT will be very strong in H2, the cash flow also will be very strong, and overall, the year will be close to our target, which is around 9.5% EBIT this year – a good pass for our 11% target next year.
EBM: Your Strategic Plan comes to an end next year, 2015, and you have already announced that you will be unveiling a new strategic plan for the period 2016- 2020. So let me ask you already, what are your longer-term ambitions for the company?
Philippe Salle: We need to be more international and probably less European. So, in the longer-term, we need to be balanced between the US, Asia and Europe. We will probably have a strong focus in the US because it’s an atomised market, there are quite a lot of opportunities, and I think we need to be much bigger in different sectors. In Asia, it’s going to be a little bit more difficult because there are not that many targets to acquire, but definitely we need to be more present in China, and probably in Japan and Korea – that will be two new countries in the landscape of Altran. The idea is to be more balanced in terms of regional focus. And we will also push more contact – we definitely think that we need to push more technology to our clients and to have excellence centres that we can identify and push at the worldwide level.
EBM: Philippe Salle, Chairman & Chief Executive of Altran, thank you very much.
Philippe Salle: Thank you.
