Cyient Announces First Quarter Results For FY 2018

–      YoY revenue growth of 12.8% in US$ terms  (US$141Mn)

–      YoY Net profit growth of 18.7%; at Rs.878 Mn

–      Services revenue YoY growth 12.4% and QoQ growth 3.2%; at US$129 Mn: highest ever

–      Cash & cash equivalents at a Rs.10,320 Mn:  highest ever

HYDERABAD, India, July 13, 2017 /PRNewswire/ --

KEY HIGHLIGHTS: Q1 FY 2018

Financial Highlights

• YoY revenue growth of 12.8% in US$ terms (US$141Mn)
• Services revenue YoY growth 12.4% and QoQ growth 3.2%; at US$129 Mn: highest ever
• Operating Profit YoY growth of 6.5%; at Rs. 1,160 Mn despite wage hike and rupee appreciation
• Net profit YoY growth of 18.7%; at Rs.878 Mn
• Cash & cash equivalents crossed Rs. 10,000 Mn for the first time; at Rs. 10,320 Mn; highest ever
• Free Cash Flow (FCF) generated stands at Rs. 648 Mn, 43% of EBITDA

Business Highlights

• Growth in services (92% of total) across verticals and geographies – most of business units and geographies grew YoY in double digits
• Attrition at 18.5%; lowest ever in last 11 quarters
• 30 new customers added

Message from the Management
Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, "Q1 FY18 was in line with our expectations both on revenue and margin.  We recorded a revenue of $140.6 Mn in the quarter an increase of 12.8% YoY and a decrease of 0.2% QoQ. Our services revenue was highest ever at $128.8 Mn a growth of 3.2% QoQ. The growth in our services business was driven by Communications, Transportation and Semiconductor business units. The Design Led Manufacturing (DLM) business continues to improve in performance and delivered a double digit growth YoY. This quarter we also recorded an operating margin of 12.8%, a dip of 29bps YoY and 50bps QoQ due to wage hikes and currency headwinds. 

"Our strategy execution continues to gain momentum and we expect to start realizing significant revenue contribution from strategy execution this year. Recognizing our focus on strategy we were awarded the Times Network Award for Strategy from institute of competitiveness. This award serves as a strong and credible endorsement of our S3 strategy and acknowledges that our Design, Build and Maintain value proposition is not only shaping our industry positioning, but also redefining the basis of competition and helping us accelerate our growth. 

"Our outlook for FY18 is strong, backed by a strong pipeline and order backlog. We expect a double digit growth in our services business while DLM business is expected to grow by at least 20%. Our margins are expected to improve by 50bps driven by improvements in operational efficiency through the year. We expect to deliver a double digit earnings growth in the year."

Mr. Ajay Aggarwal, Chief Financial Officer, said, "I am pleased to share that Cyient is progressing well on another year of well-rounded growth in revenue, profit and cash with 18.7% YoY growth in net profit and highest ever cash of Rs. 10,320 Mn. Operating profit as a focus area has penetrated to all levels in the organization. For the first time, Cyient crossed a cash of Rs. 10 billion and has had a healthy EBITDA/FCF conversion rate of ~43%. We will continue to focus on organic and inorganic strategic investments.  For FY18, we expect the momentum to pick up and continue thereon in the coming quarters as well. Cyient will continue to focus on growth, improvement in operating margin, cash generation and thus maximizing the value for our shareholders."

Business Update       
Aerospace & Defense
Aerospace & Defense business unit witnessed a growth of 2.1% YoY and 1.7% QoQ. After 3 years of softness, we saw momentum coming back in EMEA with some new wins. We are following through on our Design-Build-Maintain strategy and completed the Qualification testing for an in-flight system with serial production expected towards end of CY17. We are working on two more such opportunities whose serial production is expected to start in Q1 CY18. Specifically for the India Defence sector we are focusing on end to end LRU development.

Communications
The Communication business unit witnessed a growth of 35.2% YoY and 9.9% QoQ driven by growth in key accounts. There is continued traction in fiber roll outs and mobile site inspection and design related services. We have also finalized the Wireless strategy.

The industry is witnessing increased demand for high-speed infrastructure as well as fiber deployment across Australia, New Zealand, and the U.S. The growth momentum continues into FY18, as we see growth opportunities from fiber roll-out programs, and small cell design and deployment in Australia and North America. We are also focused on building solutions around service assurance and analytics.

Utilities & Geospatial
The U&G business unit witnessed a growth of 18.8% YoY and a degrowth of 7% QoQ driven predominantly by degrowth in few key accounts. With this momentum we expect a double digit growth for the BU in the year. We are witnessing good growth opportunities in focus areas such as grid control and asset management. We have also made significant progress around strengthening our solution offerings through a number of strategic partner agreements. Our outlook for FY18 is strong backed by strong pipeline.

Transportation
The Transport business unit witnessed a growth of 13.7% YoY and 11.7% QoQ driven by strong momentum in key engagements. We added 4 new customers in the quarter. Our strategy execution continues to gain momentum, especially around rolling stock and signalling solutions. We have also, accelerated our investments in the emerging areas of Digitalization and Design Led Manufacturing which we believe will consolidate our leadership position in this industry.

We expect strong growth in FY18 owing to growth in our focus segments of rolling stock and signaling, our strong long term relationships, improved utilization and a healthy opportunity pipeline.

Industrial, Energy and Natural Resources
The Industrial, Energy and Natural Resources business unit witnessed a degrowth of 4.9% YoY and 0.1% QoQ due to weak industry outlook and performance of some of our key clients.

The demand continues to be soft through the year. To drive growth in this segment, we will focus on infrastructure management services and are developing new adjacent solutions with analytics, electronics, and design led manufacturing. We are seeing significant traction and growth with the focus on new services and solutions.

Semiconductor, IoT and Analytics
The Semiconductor, IoT and Analytics business unit witnessed a growth of 18% YoY and 11% QoQ. The growth in the industry was driven by new engagements at our established client base.

The industry is forecast to grow by 7.2% in 2017, a much larger growth compared to 1.5% in 2016. While we expect to see a degrowth in Q2 due to increased offshoring, our outlook for the year continues to remain strong. We expect a 14.6% YoY growth driven largely by growth across key accounts and operational efficiency improvements through the year.

Medical & Healthcare
The Medical Technology and Healthcare business unit witnessed a growth of 18.6% YoY and 6.9% QoQ. The growth across the business unit's service mix is reassuring and provides added confidence in our design/build/maintain strategy. We see continued momentum across both our engineering and manufacturing services.  We are optimistic about our growth in FY18 and continue to add new clients in our focus segments.

We are also making strategic investments to support future growth. We signed an MOU to participate in the newly established Telangana Medical Devices Park in Hyderabad, India where we will operate alongside a number of other major global medical technology leaders.

Design Led Manufacturing
The DLM business unit witnessed a growth of 17.3% YoY and degrowth of 26.5% QoQ driven by Telecom, Industrial and Defense segments. The revenue from new customers is expected to rise resulting in better margins. A new assembly line has been added which will enhance our manufacturing capacity. This will become operational in Q2. Our outlook for the year continues to remain strong and we expect to see a double digit growth backed by a steady pipeline and order backlog.

Operational Highlights      

CSR Activities

• Adopted 9 Government Schools; supporting underprivileged children taking the total to 25
• Girl child enrolment in Cyient adopted schools at 54%
• Added 8 Cyient Digital Centres providing digital educational resources taking the total to 54

Infrastructure

• Opened a near shore facility in Bengaluru for one of the aerospace customers
• Started operations in Prague for an aerospace client
• Signed MOU to establish presence at the Telangana (Hyderabad) Medical Technology Park

Awards

• Cyient has won the Institute for Competitiveness—Times Network Award for Strategy
• LAKSHYA 2020 Award from Bosch (DLM) for achieving excellence in OE Projects

Operations

• Signed business alliance agreement with Kii Corporation
• Cyient signed global partnership with Viptella(Cisco) for SDNWAN
• Created New IP for Utility data management projects
• DLM qualified as an approved product supplier to UTC Aerospace System

Cyient (Estd: 1991, NSE: CYIENT) provides engineering, manufacturing, geospatial, network and operations management services to global industry leaders. Cyient leverages the power of digital technology and advanced analytics capabilities, along with domain knowledge and technical expertise, to solve complex business problems.  As a Design, Build and Maintain partner, Cyient takes solution ownership across the value chain to help clients focus on their core, innovate, and stay ahead of the curve. Relationships form the core of how Cyient works. With nearly 14,000 employees in 21 countries, Cyient partners with clients to operate as part of their extended team, in ways that best suit their organization's culture and requirements. Cyient's industry focus includes aerospace and defense, medical, telecommunications, rail transportation, semiconductor, utilities, industrial, energy and natural resources.

For more information, please visit www.cyient.com.

Follow news about the company at @Cyient.

Disclaimer

This document contains certain forward-looking statements on our future prospects. Although Cyient believes that expectations contained in these statements are reasonable, their nature involves a number of risks and uncertainties that may lead to different results. These forward-looking statements represent only the current expectations and beliefs, and the company provides no assurance that such expectations will prove correct.

All the references to Cyient's financial results in this update pertain to the company's consolidated operations comprising wholly-owned subsidiaries Cyient Europe Limited; Cyient Inc.; Cyient GmbH; Cyient KK; Infotech Geospatial (India) Pvt. Ltd. (IGIPL): partly owned subsidiaries Cyient Insights Private Limited; Cyient DLM Private Limited; joint venture Infotech HAL Ltd (HAL JV) & associate company Infotech Aerospace Services Inc. (IASI).

The income statement and cash flow provided is in the internal MIS format. MIS format is different from the income statement published as part of the financial results, which is as per the statutory requirement.

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