5 takeaways from Bechtle's fiscal FY23 results

Germany’s largest solutions provider increased headcount through acquisitions while limiting recruitment

Bechtle made gains in its headcount and services business in 2023, but suffered in IT e-commerce with SMBs reluctant to invest.

Revenue increased 6.5 per cent to €6.4bn (£5.47bn) in its fiscal full-year 2023 results.

Business volume grew seven per cent to €7.8bn.

Bechtle also stepped up its EBT 6.8 per cent to €374.5m.

"Especially in view of the great uncertainty with regard to the further macroeconomic development in Germany, but also in our other European markets, we have performed rather well," said Dr. Thomas Olemotz, chairman of the executive board of Bechtle.

"The fact that we have again grown faster than the market, thereby gaining market shares, underlines the resilience of our business model."

Here are the main highlights from the German partner's fiscal FY23 results.

Digitisation energises service business

Bechtle's service-oriented IT system house & managed services segment continues to perform well.

Revenue in this arm jumped 13.5 per cent to €4.2bn.

Services also grew organically at a double-digit rate of 11.7 per cent.

The increase was driven by high demand projects for the design, implementation and operation of multi-cloud architectures as well as related network infrastructure and IT security services.

Moreover, Bechtle expanded its business with international public-sector clients and large customers in 2023.

Medium-sized businesses reluctant to invest

Year-on-year, the revenue in the IT e-commerce segment dropped by 5.1 per cent to €2.1bn.

Bechtle attributed this decline to the tense macroeconomic situation seen throughout the year, especially in medium-sized customers with postponed projects for the renewal of their conventional IT infrastructure, particularly in the field of workplace equipment.

These deals tend to represent a large chunk of Bechtle's IT e-commerce business.

EBIT also underwent a slight decline of 4.5 per cent, though at 5.7 per cent, the EBIT margin remained steady at the prior-year level.

FluidOne CEO Russell Horton told CRN this week his group was seeing the same challenges with customers lacking confidence to invest in the current economic climate.

Headcount up through acquisitions, 'limited recruitment'

As of 31 December 2023, Bechtle's headcount at the more than 120 locations throughout Europe had undergone a year-on-year increase of 1,113 people or 7.9 per cent.

554 people, almost half of the new colleagues, joined Bechtle through M&A deals.

Without acquisitions, the headcount increase would have come to four per cent.

"In the context of the challenging economic framework conditions, we at Bechtle made a deliberate decision to limit new recruitment to moderate levels," Olemotz said.

"However, this expressly does not apply to our commitment to training."

As of 31 December 2023, the number of trainees amounted to 842, and the training ratio in Germany went up from 6.6 per cent in the prior year to 6.8 per cent in the year under review.

Operating cash flow greatly improved

In the 2023 fiscal year, the cash flow from operating activities amounted to €459m (prior year: €116.7m), an increase that brought the figure to a new record, Bechtle said.

The reseller achieved significant improvements, especially with regard to trade receivables, but also in terms of the reduction of inventories.

Despite the higher outflow for acquisitions, the free cash flow reached €151.2m.

Positive outlook in challenging times

Bechtle believes that despite economic uncertainties, the prospects of the IT market are slightly better.

Therefore, its executive board is optimistic and again expects the company to deliver above-market business performance in 202.

Business volume, revenue and earnings are expected to undergo a significant increase, and the EBT margin is to remain at a level similar to that of the prior year.

"The economic tension at the beginning of 2024 is very obvious. However, we are confident that the macroeconomic situation will gradually improve in the course of the year, especially in the second half of the year," Olemotz said.

"This is also likely to result in increased willingness on the part of our medium-sized customers to invest. More than once, we have furnished evidence of our ability to achieve profitable growth even in challenging times."