adesso managed to once again significantly surpass double market growth in financial year 2020 and generate a two-digit organic growth rate. This positive overall business performance was achieved despite the difficult macroeconomic environment characterised by pandemic-related recession. adesso’s business was impacted by the coronavirus lockdown, particularly in the second quarter of 2020.
All of adesso’s core industries were able to generate growth in financial year 2020, with the exception of the Automotive core industry. Additional customer projects in the Health, Public Administration and Manufacturing Industry business areas made a significant contribution, recording year-on-year growth of over 30 %. The Insurance business area generated a slight increase in sales in spite of a decline in licence business compared to the exceptional previous-year figures.
What’s more, strong group-wide employee growth of past years continued in 2020 and opened the door to additional sales. In terms of full-time equivalents (FTEs), the number of employees increased to 4,975, a year-on-year rise of 23 %.
Expansion of international business
The increasing internationalisation of business is reflected in the figures once again. While sales in Germany grew by 14 %, international revenue rose by 24 %. Switzerland, Austria, Spain and Turkey all performed particularly well in terms of sales. In Hungary and the Netherlands, the number of employees increased in the previous year due to acquisitions aimed at facilitating further growth. With the exception of the subsidiaries in the Netherlands and Hungary – which were only established in 2019 – and the subsidiary in Spain, all other international subsidiaries generated operating profit. All foreign subsidiaries are expected to achieve further growth.
adesso product business in the Insurance business area with in|sure Ecosphere
In the IT Solutions segment, customers exercised greater caution in the second half of 2020 on account of the coronavirus pandemic. This effect was reflected by the fall in licence sales compared to the strong previous year. However, the in|sure Ecosphere still has plenty of sales in the pipeline and initial contracts give cause for optimism in 2021.
Other operating expenses declined by 12 % despite the rise in sales. The coronavirus-related reduction in travel expenses was the main factor in this item. Cost savings in relation to events also had a noticeable effect, as customer and employee activities could only be organised online.
adesso M&A strategy
Alongside generating strong organic growth, adesso is also looking to intensify its M&A strategy. In 2020, adesso acquired companies in the Netherlands to reach an advantageous size there for typical adesso projects. Other companies were acquired in Germany and Hungary to reinforce adesso’s competencies and expand its range of services in the areas of SAP, digital experience and cloud-native technologies, which adesso believes offer particularly promising growth opportunities in the future.
Outlook and forecast for 2021
The adesso Executive Board is planning for further growth in financial year 2021. The coronavirus pandemic has shown many companies that improvement is needed in the area of digitalisation, a situation underlined by the initiatives and measures implemented by policymakers. The order situation at adesso can be described as very good for almost all industries at the start of 2021. The solid start to 2021 is also grounds for optimism. adesso aims to increase sales revenues to at least EUR 600 million in 2021. EBITDA of at least EUR 72 million is expected. In terms of products, the well-filled sales pipeline of adesso subsidiary adesso insurance solutions GmbH is expected to lead to an increase in licence revenue compared to 2020.
The sale of subsidiary e-Spirit AG, which was only agreed on 19 March 2021, is not yet included in this forecast.
adesso’s Annual Report 2020, as well as a table comparing key performance indicators, is available at www.adesso-group.de in the Investor Relations section.