2023
Annual results
One econocom

Strong resilience by Econocom’s business model

• Revenue of €2,681 million, up¹ 3.5%, including 1.2% organic growth²
• Operating margin³ of €116.2 million, up slightly on 2022
• Consolidated net profit of €62.6 million: earnings per share unchanged at €0.35 as in 2022
• 2023 performance in line with the initial key markers presented in November 2023 for the One econocom 2024-2028 strategic plan, targeting a revenue of 4 billion euros and a net result of 130 million euros in 2028.

Increase in revenue and operating margin from continuing operations

The Econocom Group generated revenue of €2,681 million in 2023, an increase¹ of 3.5% compared with restated 2022 revenue. On a like-for-like basis, organic growth² was 1.2%, demonstrating the Group’s ability to profit from its diversified and balanced positioning between its three activities in a mixed environment for the IT sector.

In accordance with the One econocom 2024-2028 strategic plan announced last November, the French “Apps, Cloud & Data” and “Les Abeilles” activities have been restated as “Assets held for sale” in accordance with IFRS 5. These companies are expected to be sold in the near future; talks are under way with potential buyers. The 2022 income statement has been adjusted accordingly as explained in the notes to this press release.

Over the period, trends in continuing operations were as follows:

• Products & Solutions (P&S) revenue totalled €1,207 million, down¹ by 2.5% in reported terms and by 6.1% organically². The market⁴ for distribution of digital workplace assets was in poor shape in 2023 (estimated to have decreased in Europe by between -11% and -15% for PCs, between -14% and -19% for smartphones and tablets). Even so the Group managed to limit the decline in its activity thanks largely to its combined offers with its other business lines. 2022 had benefited from a strong rebound effect (with organic growth of just over 15%), particularly in France, Germany and the United Kingdom, as the market recovered from post-Covid supply chain challenges. P&S operating margin³ accordingly was €43.3 million, an operating margin of 3.6%.

• Technology Management & Financing (TMF) accelerated its growth with revenue of €998 million in 2023, an increase¹ of 11.2%, including 10% organic growth². TMF’s solutions, offering personalised independent advice as well as a flexible contractual model, are particularly appreciated by customers in a context of tougher borrowing terms and increased pricing by banks. On the back of this revenue growth, particularly in Germany and Italy, the TMF operating margin³ rose¹ strongly to €47.6 million, i.e. 4.8% of revenue compared to 3.3% in 2022.

• In line with previous quarters, Services maintained momentum at the end of the year. With revenue of €476 million, growth¹ was an annualised 4.6% (4.5% in organic terms²). In a context marked of rising staff and energy costs, the Group was better at passing through these inflationary effects in the second half of the year. Margin increased from 4.3% in the first half of 2023 to 5.3% for the full-year with an operating margin³ of €25.3 million.

• Total Group operating margin³, driven by the improvement of 1.5 points¹ in margins at TMF, was €116.2 million compared to €114.2 million in 2022 restated.

Annual net income from continuing operations was €59.5 million compared to €49.3 million in 2022, after:

• other net operating expenses of €8.4 million, down significantly compared to 2022,
• financial income of -€19.8 million, compared to -€13.5 million in 2022, impacted by the significant increase in interest rates, and
• tax expense of €26.1 million, representing an effective tax rate⁵ of 28.6%.

After deducting the €3.1 million loss from discontinued operations, the consolidated profit amounts to €62.6 million.

Econocom’s 2023 performance, in particular revenue, operating margin and net profit, are broadly in line with the starting key markers of the One econocom strategic plan, presented at the Capital Markets Day on 16 November 2023.

Net financial debt⁶ limited to 1.2x EBITDA and operating cash surplus of €28 million

Net financial debt⁶ remains well controlled; it stands at €181 million at 31 December 2023, representing 38% of shareholders’ equity and 1.2 times 2023 EBITDA.

Operating cash surplus (after taking into account €209 million of discounted future cash receipts from TMF own booked leases at the end of 2023), amounts to €28 million at 31 December 2023.

Shareholder remuneration

The Board of Directors will propose at the next General Meeting to repay shareholders €0.16 per share from the share premium, unchanged vs. 2023. Based on the average closing share price over the last 20 days, this represents a yield of 6.8%.

Total planned pay-outs in July 2024 would accordingly amount to €27.6 million, or 44.1% of 2023 net profit.

Outlook

In an expected more favourable context, particularly for the IT equipment distribution markets (P&S), the Group will continue in 2024 to roll out its One econocom plan, aimed at accelerating the organic growth of its business lines, strengthening synergies between the various business segments and developing its growth drivers in the audiovisual sector (launch of the Gather with Econocom brand). To achieve this, Econocom plans to significantly increase its sales force in the target regions and recruit new talent to strengthen the appeal and distribution of its offers.

Given a controlled level of net debt and cash flow strengthened by the disposals planned during the year, Econocom will also continue its search for external growth targets in 2024 looking to acquire specific expertise.

For 2024, the Group forecasts a total revenue growth between 3% and 5%.

Beyond 2024 and over the timeframe of its strategic plan to reach €4 billion in revenue and €130 million in net profit by 2028, Econocom will seek to capitalise on:

• strong growth expected in the workplace, audiovisual, infrastructure and network markets, growth partly driven by the investments made necessary by the rapid development of Artificial Intelligence;
• an acceleration of the deployment of Econocom’s offers covering end-to-end customer needs in terms of digital assets;
• a clear roadmap with ambitious objectives that can get all teams onboard;
• a self-financing plan with a now well-advanced disposal programme that will enable the Group to execute its strategic plan, including external growth.

Econocom has also built its 2024-2028 strategic plan around strong ambitions in terms of extra-financial performance, with a particular focus on the repairability and extending the life of its customers’ digital assets, carbon footprint and strengthening equal opportunities for all employees. Econocom thus confirms that it is aiming to achieve the Platinum level of the Ecovadis® Sustainability Rating by 2028.

Information meeting on the full-year 2023 results in Brussels on 15 February 2024

¹ For continuing operations, at constant accounting standards.

² For continuing operations, at constant scope and accounting standards, including organic growth of acquired companies.

³ Going forward, the term “operating margin” will replace the term “recurring operating profit”.

⁴ Context study for the period 2023/2022.

⁵ Effective income tax rate (excluding CVAE and IRAP).

⁶ Net financial debt including current and non-current financial debt excluding debt resulting from the application of IFRS 16 to leases (premises, vehicles, etc.) for which Econocom is lessee and all assets and liabilities held for sale.