Financial Release, Hyderabad, India, April 25, 2019
Hyderabad, India, 25 April, 2019: Cyient (Estd: 1991, NSE: CYIENT), a global provider of engineering, manufacturing, geospatial, network, digital and operations management solutions to global industry leaders, today reported its consolidated financial results for the fourth quarter (Q4) of FY 2019 ending March 31, 2018.
For Q4 FY19
Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, “Our performance was lower than the initial expectations both on revenue and margin. Our revenue for the quarter stood at $165.2 Mn which was a 3.3% growth YoY and 0.3% degrowth QoQ in constant currency. In USD our revenue for the quarter was flat QoQ. We recorded the highest group operating profit margin of 15.1% since the acquisition of Cyient DLM. This was achieved due to operational efficiencies; incremental bill days and lower SG&A spend in the quarter. We also recorded our highest ever services revenue this quarter driven by Semiconductor, Utilities & Geospatial and Transportation business segments. Our Design led Manufacturing (DLM) BU witnessed a degrowth mainly on account of our defocus from non-margin generating clients and push out of an order due to documentation issues.
For the year we delivered a strong performance. We witnessed a growth of 10.1% YoY in constant currency, due to performance in Semiconductor, Communications, Transportation and Aerospace and Defense business segments. We also recorded our highest ever PAT at INR 4,898 Mn an increase of 14% YoY. This year saw an increased momentum in strategy execution resulting in acquisition of Ansem N.V (in April2018) a leading fabless, custom analog and mixed-signal application-specific integrated circuits (ASICs) design company and 100% stake in Cyient Insights, a data science company (formerly named Invati Insights) of which Cyient had acquired 51% stake in 2014. We also acquired additional 26% stake in Cyient DLM in the year. The acquisitions allow us to create a unique and comprehensive ecosystem of engineering capability, emerging technologies and design led manufacturing capability which not only enables Cyient to meet global customer expectations, but also to achieve our strategic goal of providing complete systems and solutions to clients across industries.
We also won many accolades through the year and were recognized by major industry analysts. The key among them being Pratt & Whitney supplier awards for “Supplier Highest Productivity” Award, “Supplier Innovation Award” and “Consistent Supplier productivity” Award. The awards reflect Cyient’s continued focus on excellence, innovation, and success within its Pratt & Whitney Center of Excellence (CoE). This year we were also ranked as an “Established and an Expansive” player by Zinnov, a global consulting and advisory firm, in its 2018 report on engineering R&D services. Cyient was also placed in the “Leadership Zone” across four industry verticals—aerospace, energy & utilities, transport, and construction & heavy machinery – retaining its leadership position of several years.
Our outlook for FY 20 remains strong backed by a strong pipeline and order backlog. We expect a high single digit growth in our services business while DLM business is expected to grow in the range of 15%. We will deliver a double-digit EBIT growth this year.”
Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “I am pleased to share that for FY19, we saw a strong and a well-rounded performance with earnings growth of 14% (Normalised EPS at ₹ 43.4) and operating profit growth of 17.3%. The revenue stood at $660 Mn with highest ever operating profit in INR terms (₹ 6443 Mn) and normalised PAT (₹ 4,898 Mn). Healthy conversion of Free Cash Flow to EBITDA at 48.4% culminating into a highest ever Free Cash Flow of ₹3,770 Mn. We also declared a highest ever final dividend of ₹10/share, taking the total dividend for the year to ₹15/ share. The company embarked on a special initiative of a buy-back of INR 200 crores which progressed well on anticipated lines.
The NBA program is garnering good traction and we are very confident that it would accelerate Cyient’s EPS growth by 1.5-3%, from FY21 onwards. Profit improvement initiatives including cost optimisation and operational efficiency is on top priority. This would reflect in the results in the short-term. We are confident of delivering a strong performance in FY20. We are actively pursuing opportunities in organic and inorganic investments. Cyient would continue to focus on its commitments and the investor expectations aiming to maximize the shareholder’s wealth.”
Aerospace & Defense (A&D) BU witnessed a growth of 0.4% QoQ and 5.4% YoY in constant currency. There was marginal growth in services business led by key accounts. The shortfall was primarily from the DLM and analytics business and workload challenges in Singapore business. The BU is witnessing strong traction across the product lifecycle and will continue to invest in S3 strategy to drive growth. The momentum is expected to continue into FY 20 and the outlook for the year remains positive driven by growth in Avionics and DLM segments.
The Communications BU witnessed a degrowth of 3.7% QoQ and 2.5 % YoY in constant currency. This has been a particularly difficult quarter for the BU as most of the deals got pushed to early next year. The delay in decision making on couple of large programs and work allocation being restricted impacted performance in the quarter. The BU launched various 5G offerings and is supporting a large carrier in their 5G road map. Focus on IoT, Open Source and RPA are expected to be key technological advancements in 2020. The BU expects a stronger momentum in FY 20.
Utilities & Geospatial
Utilities and Geospatial BU witnessed a growth of 3.2% QoQ and 0.8% YoY in constant currency. The growth in the BU was driven by new customer additions and new solutions offerings. More established solution offerings like iDMS for utilities and road health analytics for geospatial continue to gain traction. The BU expects a strong growth in FY20 in Europe and North American markets backed by a strong pipeline and continued interest in solutions across all geographies.
Transportation BU witnessed a growth of 3.5% QoQ and 14.8% YoY in constant currency driven by momentum in key accounts and new project wins. The BU continues to make significant progress in identifying opportunities and launching new solution offerings in areas such as Augmented Reality, Smart Asset Maintenance & Cab Alarm notification. The outlook for the year continues to remain positive driven by strong industry growth in key segments, healthy pipeline and long term relationships.
Industrial, Energy and natural resources (IE&NR)
I&ENR BU witnessed growth of 0.6% QoQ and 8.6% YoY in constant currency. The BU experienced delays in key client projects. The BU continues to witness a strong pipeline in connected equipment, power and asset health monitoring solutions with new opportunities in both existing and new clients. The mining segment is showing growth in asset health monitoring as they continue to focus on operational efficiency and automation. The power business is seeing new opportunities in turbine design and engine controls systems. The industrial business has new opportunities in augmented and virtual reality, manufacturing engineering and electronics. The BU is expected to witness growth in FY20 driven by continued performance in key accounts.
Semiconductor, Internet of Things & Analytics (SI&A)
Semiconductor BU witnessed a growth of 22.5% QoQ and 47.8% YoY in constant currency terms. Our key Accounts continued to see moderate growth while new clients contributed to additional growth. Our Turnkey ASIC business saw significant new design wins in the quarter. Despite significant headwind and margin pressure on our traditional layout and physical design services, we increased our focus on pre-silicon verification and post-silicon validation in semiconductor design services, deploying innovative equipment in our Hyderabad and Bangalore labs. This focus is helping us create momentum with clients. We continue to work with new clients, expanding our foray into unique and growing applications in AI and autonomous driving. Our outlook for FY20 continues to remain positive based on opportunities identified with key clients and the challenges that our services and solutions are primed to address.
Medical Technology and Healthcare
The Medical Technology and Healthcare (MT&H) BU delivered a growth of 4.3% QoQ and 9.7% YoY in constant currency in a seasonally slow quarter. This quarter saw increased focus on both services and design led manufacturing with an increased pipeline for large transformational opportunities providing end-to-end product development services to strategic segments. We are focused on strengthening the sales funnel and backlog and are optimistic about new business. The BU expects to witness strong growth through FY20 driven by growth in strong pipeline, order intake, venture investments and ecosystem partnerships.
Design Led Manufacturing
DLM BU degrowth of 11.9% QoQ and 10% YoY in constant currency terms. The QoQ growth was impacted by change and seasonality in oder intake in India Israel business. Our planned exit from a major customer due to low margins also impacted our growth. Our outlook for FY20 continues to remain positive based on strong pipeline and order intake.
Awards & Recognitions
Future Outlook for FY20
Cyient (Estd: 1991, NSE: CYIENT) provides engineering, manufacturing, geospatial, digital, networks, and operations management solutions 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 over 15,000 employees in 22 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.
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