Stuttgart, 24 October 2017 – In view of continued volatility in the financial services sector, the management of GFT Technologies SE (GFT) today announced to expand its business model, which was previously tailored to the needs of banks. In future, the company will also target industrial clients. The first successful projects have demonstrated that GFT’s technology focus is ideally suited to supporting industrial companies with their digital transformation projects. In this connection, the company is stepping up its investment in the expansion of new solution offerings. At the same time, increased cost savings made by two clients in the field of investment banking during the fourth quarter are affecting the GFT Group’s revenue and earnings performance. As a consequence, GFT has downgraded its revenue and earnings guidance for 2017.
With its integration of financial transactions into the supply chains of traditional industries, GFT has already gathered experience with industrial clients in Germany. In the age of Industry 4.0, payment interfaces are becoming more and more relevant – an ideal target for the company’s expanded business strategy. Above all, this requires expertise from the fields of IT and financial management. In addition, GFT has extensive know-how in forward-looking technologies like data analytics, blockchain, cloud engineering and artificial intelligence, which are particularly interesting for the digital transformation of traditional industrial processes. “GFT has already successfully implemented various platform solutions for banks and insurance companies. The next logical step is to also offer this technological expertise for industrial clients,” explains Marika Lulay, CEO of GFT Technologies SE.
“Despite an economically challenging year dominated by the strict cost-saving measures of two investment banking clients, we aim to increase our investment in the expansion of new digital solution offerings – with a particular focus on the industrial sector,” says Lulay. Earnings will therefore be burdened by capital expenditure, a squeeze on margins from the reduced revenue forecast, a lower level of capacity utilisation and higher than expected restructuring costs. Against this backdrop, GFT is now planning to generate earnings before interest, taxes, depreciation and amortisation (EBITDA) of EUR 34.00 million in 2017 (previously EUR 42.00 million). Guidance for pre-tax earnings (EBT) has been downgraded from EUR 26.00 million to EUR 18.00 million. Revenue guidance for 2017 as a whole has been lowered by EUR 10.00 million to EUR 415.00 million (previously EUR 425.00 million).
For the financial year 2018, GFT expects more stable business with its two investment banking clients on a par with the fourth quarter of 2017, further dynamic revenue growth from digital solutions for the finance sector, and initial revenue from industrial clients. Capital expenditure aimed at expanding the company’s range of digital solutions will be raised significantly in 2018. EBITDA in 2018 is expected to rise to EUR 39.00 million and EBT to EUR 25.00 million due to the lack of negative special items. All in all, GFT anticipates revenue of EUR 415.00 million in 2018.
The first digitalisation projects with major industrial clients based in the region of Stuttgart, Germany have already been completed in 2017. “German SMEs in particular are suffering from a massive shortage of IT experts at present. With its Global Delivery Model, GFT has been achieving excellent results for many years now. Our 1,000 local client consultants successfully liaise with 3,000 or so experts at our development centres in Brazil, Costa Rica, Mexico, Poland and Spain,” says Lulay. The global market potential for IT solutions in the field of Industry 4.0 is huge. According to a forecast by the market research institute MarketsandMarkets, revenues generated by Industry 4.0 solutions are expected to grow by an annual average of 15 percent from 2017 to 2022. “I am convinced that now is the right moment to tap the market potential of Industry 4.0. Thanks to our CODE_n ecosystem and strategic partnerships with platform providers, we are excellently placed to achieve dynamic growth in this market environment. Against this backdrop, we can confirm our medium-term guidance,” states Lulay. GFT plans to achieve revenue of EUR 800 million and an EBITDA margin of around 12 percent in 2022.
Note: The final results for the first nine months of 2017 will be published as previously announced on 9 November 2017.