Systems Solutions

Order entry

Development of business

The first nine months of 2023 continued to be dominated by the focusing of our systems solutions business on growth and future viability and the continuation of our transformation program. As communicated at the Capital Markets Day in May 2021, we have established four portfolio areas in line with market needs: Advisory, Cloud, Digital, and Security.

We have also defined selected industries (automotive, healthcare, public sector, and public transport), for which we have increased our offer of vertical solutions based on our expertise. In addition, we have agreed partnerships with leading cloud service providers (e.g., Amazon Web Services, Google Cloud, and Microsoft Azure), so as to be able to offer our customers an even broader and more flexible range of cloud solutions. We are also increasingly expanding our portfolio with AI (artificial intelligence)-based solutions and data room offerings.

By aligning ourselves in this way, our strategic goal is to become the leading IT service provider in the DACH region (Germany, Austria, Switzerland) and in other selected countries.

Order entry in our Systems Solutions operating segment was down by 19.1 % year-on-year in the first nine months of 2023, which also fell short of our expectations. This development was largely attributable to the high-volume deals concluded in the prior year. Furthermore, the prior-year figure includes order entry for Multimedia Solutions (MMS), which was reassigned to the Germany segment as of January 1, 2023. This development also impacts on order entry for the entire 2023 financial year.

Development of operations

Revenue, service revenue

Revenue in our Systems Solutions operating segment developed more strongly than expected, increasing by 2.5 % year-on-year in the first nine months of 2023 to EUR 2.9 billion. This positive revenue trend is driven by growth in the Digital (up 10.2 %), Road Charging (up 37.2 %) and Advisory (up 7.5 %) portfolio areas, and by a stable performance in the Cloud portfolio area (up 1.4 %), which includes our declining traditional IT infrastructure business. External revenue increased by 4.6 %, mainly driven by the Digital and Road Charging portfolio areas. Service revenue also developed positively, increasing by 1.3 %. In organic terms, revenue increased by 5.5 % year-on-year and service revenue by 4.3 %.

Adjusted EBITDA AL, EBITDA AL

In the first nine months of 2023, adjusted EBITDA AL at our Systems Solutions operating segment increased by 6.5 % year-on-year to EUR 245 million, which was in line with our expectations. Efficiency effects from our transformation program and effects from increased revenue in the Road Charging portfolio area exceeded the decline in earnings in the Cloud portfolio area, which includes our traditional IT infrastructure business. In organic terms, adjusted EBITDA AL grew by 2.5 % year-on-year. EBITDA AL increased by EUR 36 million compared with the prior year to EUR 159 million. The expense arising from special factors decreased by EUR 20 million year-on-year, to EUR 86 million, as a result of lower restructuring costs.

Profit/loss from operations (EBIT), adjusted EBIT

Adjusted EBIT in our Systems Solutions operating segment grew by EUR 14 million year-on-year in the first nine months of 2023, coming in at EUR 152 million, due to the reasons described under adjusted EBITDA AL. EBIT increased by EUR 38 million year-on-year to EUR 20 million. The expense arising from special factors decreased by EUR 24 million year-on-year, to EUR 132 million, as a result of lower restructuring costs and lower depreciation, amortization and impairment losses.

Cash capex (before spectrum investment), cash capex

Cash capex in the Systems Solutions operating segment stood at EUR 166 million in the first nine months of 2023, up EUR 5 million year-on-year, primarily due to increased demand for on-board units in the Road Charging portfolio area and higher investments in the Digital portfolio area.