Software and IT services company Infotel forecast its operating margin would rebound this year from a 2012 low when a hiring spree backfired as some clients postponed projects. Infotel, whose customers include Airbus, BNP Paribas and PSA Peugeot Citroen, aims to outpace the market in 2013, despite tough conditions, its head said in an interview.
"We know that 2013, on the whole, will again be a difficult year," Chief Executive Michel Koutchouk told Reuters in an interview. Nonetheless, "in the US and China, where IBM sells our software, the situation has improved."
Infotel had been hiring IT experts to expand its network of service centres, which handle the development, maintenance and testing of software, but was faced with a sudden drop in demand from September as many cautious clients put projects on ice. Although sales grew 8.7 percent to 134.3 million euros last year, higher staff and contracting costs, which rose by 14.8 million euros ($19.26 million), weighed on current operating profit, which fell 35 percent to 7.1 million euros.
The current operating margin fell to 5.3 percent from 8.9 percent in 2011, its lowest level since Infotel was listed in 1999, according to Thomson Reuters data.
Its software division, which is its most profitable business and which includes royalties on sales of software it provides to IBM, saw 2012 sales drop slightly to 7 million euros.
"Last year was bad, on the one hand due to additional costs to do with the launch of new service centres and on the other hand, the crisis impacted us in particular in the second half of the year and in software," he said.
Infotel hopes to return to its usual margin level of around 8-9 percent in 2016, Koutchouk said, when it is targeting sales of 200 million euros, helped in part by international growth. Its shares are down 1 percent so far this year, after a roughly stable performance last year, valuing the company at 72.3 million euros.