Econocom reports small growth in Q2 despite economic challenges

Revenue for the French reseller giant was up 3.9 per cent compared to 2022

French IT reseller Econocom reported revenues of €1.3bn (£1.12bn) in Q2 2023, up 3.9 per cent year on year.

Organic revenues did take a small hit, dropping by 0.4 per cent, which the reseller giant said was due to their product and solutions (P&S) business.

P&S posted an organic decline of 2.8 per cent in the first half of 2023, in a digital asset distribution market down more than 10% year-on-year and affected by pressure on prices.

As a result, operating margin was €15.9m (£13.67m), or 2.7 per cent of revenue.

However, after a slight decline in the first quarter, the company's services business revenue for the six months of 2023 was up 2.6 per cent, purely organic, at €254m (£218.36m).

Operating margin was adversely affected by the increase in personnel costs in the digital industry in 2023, which has been partially passed through for the time being.

Operating margin accordingly was €11.0m (£9.46m), representing 4.3 per cent of revenue.

Econocom said that better recharging of cost increases should enable the services business to deliver a higher margin in the second half.

The technology management and financing (TMF) business reported revenue of €498m (£428.13m), an increase of 2.8 per cent, or 0.9 per cent on an organic basis.

As anticipated in the Econocom Q1 2023 results, growth slowed down in the second quarter, with fewer operations generating strong contributions to revenue and margins than in the first half of 2022.

However, Econocom assured that the commercial prospect for the coming months will allow it to aim for a return to faster-paced growth in the second half.

Operating margin was €17.3m (£14.87m), representing 3.5 per cent of revenue.

Other operating income and expenses amounted to €4.7m (£4.04m), reduced by more than 50 per cent compared to the same period in 2022.

Net financial expense, impacted mainly by the rise in interest rates (for €3.5m), amounts to €9.7m (£8.34m).

Net financial debt saw a slight increasing coming in at €321m (£275.96m) on 30 June 2023, compared to €272m (£233.84m) a year earlier.

The increase was attributable mainly to the purchase of treasury shares, the repayment of share premiums and cash outflows on acquisitions totalling €60m (£51.58m), plus a temporary increase in working capital requirements.