Systems Solutions

Order entry

Development of business

We realigned our strategy for the Systems Solutions operating segment with a focus on returning to sustained growth in this area. Our previous investments in growth areas and innovation fields (such as the public cloud, the Internet of Things, all IP) along with efforts to scale back the number of risk-prone legacy contracts in our traditional IT operations mark important steps on our transformation journey. On this basis, we continue to realign the segment strategy to focus on consistently moving the business into strategic growth areas while simultaneously strengthening our telecommunications business and successfully managing the decline in traditional IT business.

With this in mind, we launched a comprehensive transformation program under which we realigned our organization and workflows, developed a new strategy for our portfolio, and created three offering clusters. Ten portfolio units and one emerging business unit will in future look after not only our traditional IT and telecommunications business, but also our growth areas (SAP, digital solutions, public cloud, security, Internet of Things, classified ICT, health, and toll collection systems).

Order entry in our Systems Solutions operating segment was up by 29.3 percent in the reporting year, marking a particularly positive development compared with the prior year. This is due in part to a number of big deals that we closed in traditional IT business this year, which compare with a lower volume included in the prior-year figure. Order entry in our growth areas also developed very well in the reporting year.

Development of operations^a

Total revenue

Total revenue in our Systems Solutions operating segment in the financial year amounted to EUR 6.9 billion, on a par with the prior-year level. Revenue in our growth areas developed positively, driven mainly by the public cloud, the Internet of Things, the healthcare industry, and toll collection systems. By contrast, revenue with traditional IT business declined year-on-year. This was primarily a result of the decline in our international corporate customer operations and the general falling market trend in our core market of Western Europe, as well as to deliberate portfolio decisions (such as the termination of end-user services).

EBITDA, adjusted EBITDA

In the reporting year, adjusted EBITDA at our Systems Solutions operating segment declined by EUR 80 million to EUR 429 million, which was in line with our expectations. The decrease was attributable primarily to the higher costs involved in establishing operations in growth areas, in particular in the Internet of Things and the healthcare market, and to higher financial burdens in our telecommunications business due to the ongoing migration to all IP. EBITDA decreased by EUR 117 million year-on-year to EUR 163 million, mainly due to the effects described under adjusted EBITDA. Special factors were up EUR 37 million year-on-year, attributable primarily to restructuring measures.

EBIT, adjusted EBIT

Adjusted EBIT in our Systems Solutions operating segment declined by EUR 89 million year-on-year, coming in at EUR 32 million. The effects described under adjusted EBITDA were the main drivers of this decrease. EBIT increased significantly year-on-year to EUR -291 million, attributable largely to an impairment loss on goodwill of EUR 1.2 billion that had been recognized in the prior year.

Cash capex

Cash capex in the Systems Solutions operating segment stood at EUR 462 million in the reporting year, compared with EUR 383 million in the prior year. Capital expenditures remain focused on developing our operations in growth areas, such as digital solutions, the Internet of Things, and toll collection systems. In parallel, we are investing in the upgrade of our in-house IT systems.