Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sesa SpA (FRA:1S3, Financial) reported a 4.6% increase in total revenues for FY25, reaching EUR 3.36 billion.
- The company achieved a significant growth in the digital green VAS sector, with a 43% year-on-year increase, and 110% growth in Q4 alone.
- Business services saw a 35% year-on-year revenue increase, with 65% of this growth being organic.
- The company plans to increase its share buyback program from EUR 10 million to EUR 25 million, enhancing shareholder value.
- Sesa SpA (FRA:1S3) has a strong focus on sustainability, reporting a 78% reduction in waste per capita and increasing the share of green electricity to 95%.
Negative Points
- The ICT value-added solutions segment experienced a 3.4% decline in revenues year-on-year.
- The adjusted group net results decreased by 9.9%, reflecting challenges in maintaining profitability.
- The net financial position worsened by EUR 50 to 70 million, impacted by investments and dividend distributions.
- The company faced challenges in software system integration, with a low EBITDA margin compared to previous years.
- Sesa SpA (FRA:1S3) reported a decline in adjusted consolidated EBIT by 3.8% year-on-year.
Q & A Highlights
Q: Can you explain which business areas performed below expectations and what caused the gap in quarterly cash flow?
A: We underperformed in software system integration, particularly in terms of EBITDA, due to low margins despite a 7% revenue increase in Q4. The ICT VAS sector also saw a 5% revenue decline compared to the previous quarter. However, we performed well in the green and business services sectors, which are expected to continue growing. The plan does not anticipate significant EBITDA margin increases in software system integration for FY25.
Q: How is the integration of past M&A progressing, and what is the M&A strategy for the next 12 months?
A: The new industrial plan focuses on organic growth without relying on new M&A. We have reduced planned investments from EUR150 million to EUR80 million annually. The integration of past M&A is ongoing, particularly in software system integration, to improve operating efficiency. This is not yet reflected in our business plan forecasts.
Q: Can you provide insights into the main projects in business services and software system integration for this year?
A: In business services, we are expanding our operations with new major customers in banking and insurance, aiming for 15% revenue and EBITDA growth. In software system integration, cybersecurity is a key focus, with opportunities arising from new regulations. We are also integrating AI and automation across our offerings to enhance efficiency and market penetration.
Q: Could you detail the factors impacting the net financial position and the prospects for M&A and working capital?
A: The net financial position was impacted by higher-than-expected investments of EUR160 million and a EUR30 million dividend distribution. We generated around EUR120-125 million in cash from operations, resulting in a EUR60-70 million decline in the net financial position. We aim to improve our financial position and increase cash flow generation to EUR150 million in the coming year.
Q: How are the planned EUR80 million investments split between CapEx and M&A?
A: Most of the EUR80 million investment will be allocated to CapEx and internal development of digital platforms and applications, focusing on AI and automation. We have earmarked EUR30 million for M&A, but this is not reflected in our forecasts for 2026 or 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
