January–March 2013 (1st quarter)
Outlook For 2013, IFS expects strong license revenue growth and an improvement in EBIT.
Gaining efficiency for continued growth.
The first quarter of 2013 has seen IFS execute on an efficiency program as announced in our 2012 Year-End Report. The program has been fully actioned in the first quarter and in line with our previously provided forecasts. We have charged the amount of SKr 92 million to the results for the first quarter.
The underlying business remains strong. The recently announced contract with Emirates is strong evidence that we are executing well in our target sectors. Emirates have selected IFS Applications to support their new, and Asia’s most technically sophisticated, engine overhaul facility. In the first quarter we were also pleased to announce that Ericsson, the world’s leading provider of communications technology and services, had chosen IFS Metrix Service Management to support business-critical processes in its Hardware Services business unit. The Metrix product was acquired by IFS in our most recent acquisition in 2012.
Consulting, which experienced a reduction of 4 percent in quarter one, currency adjusted, is expected to pick up in the coming quarters both in terms of revenue and margin. As license revenue, along with maintenance revenue, grew in quarter one by 6 percent, adjusted for currency, product revenue as a proportion of total revenue increased to 50 percent (47). The change in revenue mix will continue. Over the longer term, we expect product revenue to grow at least at twice the rate of consulting.
Industry analyst firms such as Gartner expect overall market conditions in 2013 to be very similar to 2012, with no or only slight growth. Despite entering yet another year with challenges in the global financial market we continue to see good growth in our target markets of offshore, oil and gas, EPCI, and energy. We see this reflected in good pipeline growth and an increasing awareness of IFS being recognized as the intelligent alternative choice for global businesses. Consequently, we expect to deliver strong license revenue growth and an improvement in EBIT for the year, and that costs for improving our efficiency will be matched by savings realized in the full year.
President and CEO