Sinnerschrader: Audi Win, Gear Change For Group
Edison | Jul 20, 2016 03:46AM ET
Sinnerschrader O.N. (DE:SZZG) reported 25% underlying revenue growth in Q3 and, while staffing constraints are putting renewed pressure on margins, we are confident about the medium-term outlook for the group, which was recently selected by Audi AG (F:NSUG) as its worldwide digital lead agency, marking a gear change in SZZ’s profile. The shares have performed well, yet the rating remains at a significant discount to agency peers – unwarranted given momentum and the outlook.
Q3: Strong demand puts pressure on resourcing
On a like-for-like basis, Q3 revenues increased by 24.5%, keeping up Q2’s strong momentum. On a headline basis (including the impact of the now discontinued Next Audience), year to date revenue growth is 11.3%, putting the group comfortably on track to deliver its €50.5m revenue target for the year. However, a tight labour market, a prolonged pitch process for the role of Audi’s worldwide lead digital agency, which it has won, and some margin pressure on a few ‘agile’ projects has affected EBITA margins and management now expects to deliver EBITA of €4.5m (down from previous guidance of €5m).
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