Nemetschek’s earnings release today did little to calm concerns about a slide in engineering software sales in Europe, as it sees customers dealing with a projected economic slowdown. Second quarter results were good, as revenue rose 6% to €43 million to lift H1 2012 results by 7% to €84 million. The forecast, however, indicates quite a bit of caution and that sent the share price down over 2%.
By type of revenue, for the first half of 2012, license revenue was up 7% to €41 million while maintenance revenue was €39 million, also up 7%.
By division, Design remains by far the largest, with H1 2012 revenue of €68 million, up 8% due to “disproportionate growth in Asia”. The Build segment was flat with last year at €7 million, as customer spending was “restrained”during the second quarter. The other two divisions, Manage and Multimedia, combined for 6% of growth to €9 million.
Nemetschek says that economists have updated their models for the European building sector, now forecast a 1.5% contraction in 2012 and much slower growth in 2013 than earlier predicted. Nemetschek typically gets over 80% of total revenue from Europe, so while the company usually outperforms this building sector data, this contraction could lead to flat revenue or even a decline. Economists have Japanese construction output growing by 2.2%, China and Brazil by 10% and 8%, respectively — but those markets represent something like 10% to 15% of Nemetschek’s total revenue and will not move the needle all that much. Nemetschek is working to expand into these new markets, but it takes time to build partnerships and market awareness.
The slowdown in Europe contributed to under-performance in Nemetschek’s Allplan business, leading the company to put in new management to, as CFO Tanja Tamara Dreilich puts it, “lead Allplan to new profitability and strong growth.” Look for more information about their plans for Allplan over the current quarter.
Given the slowdown in the construction sector in Europe and disruption in Allplan, Nemetschek said today that it expects 2012 revenue at the lower end of group guidance, or a bit below the €180 million forecast initiated earlier this year.