Quarterly sales came to €57.7 million, up 5.0% on the fourth quarter of the previous financial year. This includes revenue from newly acquired companies that amounted to €1.5 million, with the bulk deriving from ESI ITI GmbH, which was acquired in January 2016. Currency effects, which were more moderate than in previous quarters, had a positive impact of €0.3 million, with the Japanese yen weakening towards the end of the year and the pound sterling continuing well below its 2015 level against the euro.
Sales from the Licenses activity rose 2.6% to €48.7 million. As a reminder, performance in the period was affected by the movement of a €1.4 million contract in Asia previously recognized in the fourth quarter but now recognized in the previous quarter (Q3). This shift has influenced the seasonality of our Licenses activity and better balances the first three quarters of the year.
Sales recorded by the Services activity totaled €9.0 million; the strong increase of 19.9% reflecting the continued momentum of ESI Group’s high value-added consulting activities.
Full-year 2016 sales
Full-year sales totaled €140.6 million up 12.7%. Acquisition-related revenue—mainly from ESI ITI GmbH—amounted €6.4 million, reflecting the implementation of initial commercial synergies. The positive impact of currency effects over the financial year came to €2.1 million. The key factor was the favorable trend in the Japanese yen, which was offset to some extent by depreciation of the pound sterling during the period. The product mix reflects the strong performance in Services, which contributed 23% of total sales, compared with 22% in the previous financial year.
Sustained Licensing activity
Licenses activity recorded annual sales of €108.3 million, up 11.6% compared with the previous financial year. This momentum was driven by the growth in the installed base (+13.0%), that holds a high repeat business rate of 89.1% measured for the organic perimeter and at constant exchange rates. New business generated €17.9 million in revenue, up 3.0% on 2015.
Strong performance in Services
Services revenues surged 16.5% to €32.2 million. This boost was driven by continued expansion in engineering studies (+16.8%), ESI Group’s core business, and the strong growth in special projects (+57.1%). The latter comprise co-creation and methodological transformational projects related to the newly acquired and emerging technologies.
Geographic sales mix: business momentum in Asia
In 2016, the Asia-Pacific area outperformed other regions, contributing 39% of total revenue, compared with 36% in the previous year. At the same time, business volume in the Americas shrank relatively to 16% of total sales versus 19% in 2015. Europe’s contribution remained stable at 45% of the total, compared with 46% in the previous financial year.
The BRIC countries generated 13.3% of sales compared with 12.6% in 2015. Healthy performance in China and India was among the factors that contributed to this increase.
Highlights of 2016
Major contracts renewed in the Automotive sector
Despite the challenging environment, the three-year agreement with Volkswagen Group was renewed with an expanded perimeter for the ninth consecutive time. Renault-Nissan also renewed its three-year joined contract for the second time. These renewals attest to the compelling nature of ESI’s virtual engineering solutions. These provide a unique multi-domain and multi-physics environment that enables customers to virtually manufacture and assemble the essential components of a product, using a single core model, shared in real time, that captures the level of physical information needed to meet industrial and regulatory (certification) requirements. The collaboration with Honda, another flagship partner of ESI, has also been strengthened, reaffirming the strategic ties between ESI Group and the automotive sector, which is leading the transition to the digital factory.
The Consumer Electronics Show (CES) in Las Vegas – joined for the first time by ESI - was also an opportunity for ESI Group to showcase its digital technology solutions for testing driver assistance systems and autonomous vehicles. ESI Group’s disruptive technology, combined with supplementary ICT and IoT innovations, is perfectly suited to meet industrial challenges. The technology featured at CES will help sustain the transformation underway in the Automotive sector.
Business sector diversification
ESI Group has strengthened its presence in the ‘Aeronautical and Aerospace’ segment, which has now become its second-largest sector of activity after Automotive. In a sign that this sector is gradually embracing the digital factory model, the orders booked for innovative Services posted a strong increase over the financial year.
Successful integration of ESI ITI GmbH’s solution
Integration of the newly acquired companies continued successfully in 2016, providing further evidence of ESI Group’s know how in that domain.
The steep increase in the sales recorded by ESI ITI GmbH, the leader in
0D-1D mechatronic and multi-domain systems with its SimulationX
solution, reflects the achievement of business synergies. More broadly,
the relevance of ESI Group’s strategic vision of bringing together the
different universes of modelling with areas of physics, from the most
simplified (0D-1D dimension systems) to the most sophisticated (3D-4D
components) is confirmed.
