BTS Group: Feedback from CEO call - ABG

2023 is soft but BTS rarely wastes a crisis and is prepared for 2024
Pricing, software and talent mix are key drivers to reach margin target
16% EBITA growth in H2e, 23% in 2024e at 14.1x 2023e EV/EBITA

2023 is a soft consulting year, but BTS prepares for 2024
Today, we hosted a call with BTS CEO Jessica Skon, discussing the current market, the momentum post summer and BTS strategy to reach its financial targets. Mrs Skon started off to conclude that 2023 is a soft year. BTS has a clear strategy to manage the current market, by keeping key employees and train them internally to be ready for when the market recovers. The US tech sector seems to have stabilised and Mrs Skon mentioned some new projects with tech companies that have now re-set their organisations and are ready to excel sales efforts again. Combined with a soft, but stable European market, it sounds like the FY guidance is reachable (2023 EBITA in line with 2022). Longer-term, BTS targets 20% annual sales growth, and Mrs Skon divided it to 10-15% organic growth and 4-6% from acquisitions over time. As BTS has 1-2% global market share and operates in 24 countries, the destiny lies more in its own hands than the market. Regarding the current market, management consulting peer Accenture reported its Q4'22/23 yesterday, reporting a 4% constant currency growth (vs 8% for FY'22/23) and guiding for -2% to 2% constant currency growth in Q1'23/24 but 2-5% constant currency growth in FY'23/24, indicating a somewhat slow market at the moment but expected to improve during 2024.

The way to the 17% EBITA margin target
BTS raised its EBITA margin target to 17% when it reached the former target of 15% in 2021. As 2021 was a year of good demand combined with low delivery costs (high share of virtual delivery, less travelling and short lead-times between projects), we were curious to understand the path to the new margin target as the recent development has taken the margin down to ~13.5%. Mrs Skon highlighted three drivers, b... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/bts-group/Equity-research/2023/9/bts-group---feedback-from-ceo-call/