Systems Solutions

Order entry

Development of business

The first three months of 2020 were dominated by efforts to further develop our realigned systems solutions business. Investments in growth areas and innovation fields (such as the public cloud, the Internet of Things (IoT), digital solutions, security) create the basis for us to continue to focus our segment strategy on a sustainable shift into strategic growth areas. In parallel, we are working to strengthen our telecommunications operations and successfully manage the decline in traditional IT business.

Under an extensive transformation program, we realigned our organization and workflows, adjusted capacities, and developed a new strategy for our portfolio. Stand-alone portfolio units look after not only our growth areas (public cloud, Internet of Things (IoT), digital solutions, security, SAP, classified ICT, and road charging) but also our traditional IT and telecommunications businesses. Consistent with our efforts to implement our Group strategy pillar “Lead in business productivity,” the next step in 2020 will be to combine the TC Services and Classified ICT units (until now assigned to us), with the exception of a number of activities assigned to Classified IT project business, with the telecommunications business for business customers of the Germany operating segment.

In the first three months of 2020, order entry in our Systems Solutions operating segment was down by 13.4 percent against the particularly strong prior-year quarter, mainly on account of traditional IT and SAP.

Development of operations

Total revenue

Total revenue in our Systems Solutions operating segment in the first three months of 2020 remained at the prior-year level of EUR 1.6 billion. The upward revenue trend in our growth areas, in particular public cloud and security, was sufficient to offset the declines in traditional IT operations and in telecommunications business. The general downward trend in traditional IT operations was primarily a result of the decline in our international corporate customer operations and the falling market trend in our core market of Western Europe, as well as of deliberate portfolio decisions (such as the termination of desktop services).

EBITDA AL, adjusted EBITDA AL

In the first three months of 2020, adjusted EBITDA AL at our Systems Solutions operating segment increased by EUR 8 million year-on-year to EUR 100 million, mainly due to a positive trend in our growth areas public cloud, digital solutions, SAP, and IoT. EBITDA AL increased by EUR 5 million compared with the prior year to EUR 51 million, due to the same reasons. Special factors were up slightly year-on-year to EUR -49 million due to ongoing restructuring measures.

EBIT, adjusted EBIT

Adjusted EBIT in our Systems Solutions operating segment in the first three months of 2020 increased by EUR 16 million year-on-year, coming in at EUR 13 million. The effects described under adjusted EBITDA AL were the main drivers of this increase. EBIT increased by EUR 13 million in the reporting year to EUR -36 million, also due to the effects described under EBITDA AL.

Cash capex

Cash capex in the Systems Solutions operating segment stood at EUR 35 million in the first three months of 2020, compared with EUR 93 million in the prior-year period. This was due on the one hand to front-loaded investments in the final quarter of the prior year, and on the other to a decreased need for investments in traditional IT and telecommunications business in the reporting quarter. Capital expenditures remain focused on developing our operations in growth areas, such as digital solutions, the Internet of Things (IoT), and road charging.