- Competition and declining prices reduce overall revenues.
- Order entries rise significantly.
- Adjusted EBIT and adjusted EBIT margin have improved.
The second quarter of 2012 saw a pleasing trend in new orders for T-Systems. The volume of new orders increased by 8.2 percent year-on-year to EUR 2.2 billion. Deals such as those concluded with British energy group BP and Swiss industrial group Georg Fischer show that T-Systems is once again securing an increasing number of major deals.
Revenue was hit by sustained competitive pressure and price erosion in the ITC industry. T-Systems saw its total revenue for the second quarter decline by 1.3 percent year-on-year to EUR 2.2 billion, with external revenues decreasing by 1.5 percent. At the same time, there was growth resulting from a strong performance in new business at international level, where external revenues increased by 5.9 percent year-on-year.
There was a positive trend in the key earnings indicators. Adjusted EBIT rose by 55.6 percent in the quarter to EUR 70 million, leading to an adjusted EBIT margin of 3.1 percent compared with 2.0 percent the previous year. Adjusted EBIT increased to 54.1 percent and the adjusted EBIT margin to 2.5 percent in the first half of the year.
Taking service products from the growth area of cloud computing, T-Systems fended off fierce competition to secure deals with several corporate customers. For example, VW's Spanish subsidiary Seat implemented a major cloud project in the reporting period and will use information and communications technology on a dynamic basis in future, adapted to its current business needs. Further progress was made with intelligent network solutions. For example, energy supplier RWE chose Deutsche Telekom as its service provider for smart metering. The deal involves the installation of 15,000 digital electricity meters in the city of Mühlheim an der Ruhr.
Systems Solutions operating segment*:
Comment on the table: a Non-core activities and consolidation.
This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows, and personnel-related measures. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control. Among the factors that might influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures, and the impact of other significant strategic, labor, or business initiatives, including acquisitions, dispositions, business combinations, and our network upgrade and expansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings, and regulatory developments, among other factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets, and changes in interest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions. Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect our results at the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, our actual performance may materially differ from the performance expressed or implied by forward-looking statements. We can offer no assurance that our estimates or expectations will be achieved. Without prejudice to existing obligations under capital market law, we do not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise.
In addition to figures prepared in accordance with IFRS, Deutsche Telekom alsopresents non-GAAP financial performance measures, including, among others, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt, and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.
About Deutsche Telekom Deutsche Telekom is one of the world’s leading integrated telecommunications companies with more than 129 million mobile customers, almost 34 million fixed-network lines and 17 million broadband lines (as of March 31, 2012). The Group provides fixed-network, mobile communications, Internet and IPTV products and services for consumers, and ICT solutions for business and corporate customers. Deutsche Telekom is present in around 50 countries and has over 235,000 employees worldwide. The Group generated revenue of EUR 58.7 billion in the 2011 financial year - over half of it outside Germany (as of December 31, 2011). About T-Systems Drawing on a global infrastructure of data centers and networks, T-Systems operates information and communication technology (ICT) systems for multinational corporations and public sector institutions. On this basis, Deutsche Telekom’s corporate customer arm provides integrated solutions for the networked future of business and society. Some 48,200 employees at T-Systems combine industry expertise with ICT innovations to add significant value to customers' core business all over the world. The corporate customers unit generated revenue of around EUR 9.2 billion in the 2011 financial year