ECA Group: decline in revenue but strong order intake momentum in the first 9 months of 2018

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¹ Unaudited 2018 figures

² As of January 1, 2018, the Group applies IFRS 15 "Revenue from Contracts with Customers". All changes and comments indicated in this press release are in comparison with the 2017 figures restated for the implementation of this standard.

³ In order to assess the performance of its ongoing activities, the Group will present and comment on the adjusted results in addition to the reported figures. The adjustments concern in particular the contribution of ECA Sindel and SSI. The figures in this press release are not expressed as adjusted figures, unless otherwise specified.

Consolidated revenue for the first nine months of 2018 was €69.3 million, down 10.3% compared with the first nine months of 2017. This decline reflects the insufficient orders intake recorded before the end of 2017, which does not offset the strong performance of Simulation since the beginning of the financial year. Adjusted for the contribution of a subsidiary deconsolidated in 2018 and of another whose business was sold, revenue was €69.0 million, down 8.3% compared with the first nine months of 2017.

In the first nine months of 2018, revenue from the Robotics division totaled €38.0 million, down 18.1% compared with the first nine months of 2017, and 14.8% on a comparable basis (deconsolidation of ECA Sindel at January 1, 2018). This performance is due to delays in orders observed until the end of 2017, despite the strong momentum of instrumentation and control activities, as well as naval architecture activities.

The division recorded several new commercial successes in the third quarter, in particular a new contract for more than €4 million with Sonatrach and a contract for nearly €9 million, including a firm tranche of €2 million, to supply specific equipment to a defense client. Accordingly, the division's orders intake doubled compared with the first nine months of 2017.

Revenue from the Aerospace division was €24.3 million, down 3.6% compared with the first nine months of 2017. The strong performance of the embedded equipment business only partially offset the decline in the assembly line business.

Lastly, Simulation recorded growth of 23.3% compared with the first nine months of 2017, reaching €7.0 million, driven by the performance of the second contract for military vehicle driving simulators since the start of the financial year. Adjusted for the contribution of the SSI subsidiary, whose business was sold on August 31, the division's revenue was €6.7 million, up 22.6% compared with the first nine months of the 2017 financial year.

Outlook

At September 30, 2018, ECA Group's backlog was €99.8 million, i.e. an increase of 1.1% compared with June 30, 2018 and of 10.3% compared with September 30, 2017 adjusted. The increase in the backlog would be even more significant if it included the LOI signed on October 25 (see press release) for an order of more than €12 million for the supply of equipment to French Barracuda submarines. The Group thus recorded several commercial successes in 2018, with an orders intake up 50% at the end of September, compared with the same period last year. This strong commercial performance, combined with other orders under negotiation, will drive business growth in the medium term. In the short term, however, based on the revenue for the first nine months of the financial year, the Group is unable to confirm its target revenue for 2018, expected to show a slight increase compared with 2017.

As part of the technological and commercial partnership announced with Naval Group (see press release dated October 9), in early October ECA Group responded to the call for tenders launched by Belgium for a Belgian-Dutch cooperation for the supply of 12 minehunters equipped with drone systems, and would also supply specific products to another consortium that responded to this call for tenders. Being successful in this bid, which remains very hypothetical at this stage, would represent the most significant order in the history of ECA Group, even in its minimum configuration.