Cyient reports a strong quarter with Well-rounded growth in Revenue, profit and cash

Performance in line with outlook for fy 19 with strong growth in dlm Business
( | Press Release | 2018-10-26 19:31:25 )
Financial Release, Hyderabad, India
– Highest ever PAT Growth; 54% QoQ & 14% YoY
– Highest ever quarter on revenue ($168.9Mn), Operating profit (?1,626Mn) and PAT (?1,271Mn)
– Constant currency revenue growth of 6.5% QoQ and 14.5% YoY
– Company declared an interim dividend of ?6.0/Share - highest ever

Hyderabad, India: 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 second quarter (Q2) of FY 2019 ending Sept. 30, 2018.
Financial Highlights
• Highest ever PAT Growth; 54% QoQ & 14% YoY
o Overall PAT for the quarter at ?1,271Mn
• Highest ever quarter on revenue ($168.9Mn), Operating profit (?1,626Mn)
o YoY revenue growth of 12.5%, QoQ at 5.1%
o QoQ operating profit at 23.5%
• Constant currency revenue growth of 6.5% QoQ and 14.5% YoY
• Service margin expansion of 212 bps QoQ at 15.3%, led by improved utilization of 78%, up 294 bps; Group margin expansion of 151 bps QoQ at 13.7%
• Highest ever Services revenue at $146Mn; 8.7% YoY growth; DLM growth: 44.8% YoY
• Cash flow conversion at 72%; H1 at 47%
• Highest ever cash balance of ?12Bn after payment of final dividend
• DSO at 82 days, 7 days lower QoQ
• Company declared an interim dividend of ?6.0/Share - highest ever

Business Highlights
 YoY revenue growth in Transportation, Communication and I&ENR stood at 14%, 12% & 8% respectively
 NAM, EMEA & APAC YoY revenue growth of 17%, 6% & 11% respectively
 Recieved AS9100 Rev D and ISO 9001:2015 quality certifications for Melbourne (FL) Facility
 Successfully completed the TL 9000 2nd surveillance audits for Hyderabad and Paragould locations
 Cyient - Bluebird JV wins its first order from Indian Army for SpyLite Mini UAS
 NBA program in full swing
 Opened Experience Centre at Blacktown, Australia
 Extending Pune Facility to accommodate growth in John Deere
 Launched TRM at Farnborough Airshow 2018

Message from the Management

Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, “I am delighted to report yet another very strong quarter. We witnessed a strong growth of 14.5% in constant currency driven by growth across Aerospace and Defense, Transportation, Industrial, Energy and Natural Resources (IENR) and Semiconductor, IOT and Analytics (SIA) business units. On a QoQ basis we witnessed a growth of 6.5% in constant currency. The services business witnessed a growth of 3.5% in constant currency while DLM business witnessed a growth of 27%. I am especially happy to report the strong performance in the DLM business, which I am certain is a reflection of the potential for growth and strategic synergy that exists in the business.

With focus on driving execution on AGILE strategy our rigor on solutions development continues. This quarter, Cyient Systems and Solutions (CSS), our JV with BlueBird Aerosystems, won a bid from an Indian Defence unit to supply SpyLite HAASS systems for high altitude surveillance. As part of this bid CSS will supply two systems through the year. Our New Business Accelerator (NBA) Program focused on technology driven solutions continues to make good progress with all projects on track for commercial development. The NBA is expected to accelerate Cyient’s EPS growth over the next few years.

This quarter we were recognized as the Top IT/ITES Exporter in the Rs 1,000 crore export category by HYSEA. Our Chairman, Mr. BVR Mohan Reddy was also conferred with a Lifetime Achievement Award by HYSEA. Cyient was also named as one of the Top 20 most promising Aerospace Tech Solutions Providers by CIO Review. We were selected for our ability to illustrate the functionality of services, systems, and solutions, and for being at the forefront of impacting the aerospace market. Cyient was identified as a “Major Contender” in the Everest Group Verification & Validation engineering services Peak Matrix 2018 in the quarter.

Our outlook for FY 19 continues to remain strong. We expect a double digit growth in our services business, our DLM business will grow in high double digits. We also expect double digit growth in operating profit through the year. Our operating margin is expected to marginally improve through the year driven by operational improvements and upsides from exchange rates, some of which will be offset by wage hikes and investments we make through the year.

Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, “I am pleased to share that we saw the highest-ever revenue ($168.9Mn), operating profit (?1,626Mn), FCF (?1,585Mn) and PAT (?1,271Mn) in Q2 FY19 for a quarter. Cyient is progressing well on another year of well-rounded growth in revenue, profit and cash with growth of 23.5% QoQ in operating profit along with the highest ever PAT growth of 54% QoQ (14% YoY). We also saw expansion of 151 bps QoQ in OPM and that of 212 bps QoQ in Services margin. Healthy conversion of Free Cash Flow to EBITDA at 72% has translated into a highest ever cash balance of $12Bn after payment of dividend. DSO is lower by 7 days QoQ at 82 days. We declared a interim dividend of ?6.0/share compared to ?5.0/share in Q2 FY18.

We remain deeply focussed on organic and inorganic strategic investments. We expect the momentum to continue in the next two quarters as well. Cyient will continue to focus on growth, improvement in operating margin, cash generation and thus maximizing the value for our shareholders.”

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