CENIT Aktiengesellschaft (CSH) Earnings Call Transcript & Summary

Welcome and thank you for joining today's earnings call of CENIT AG following the publication of the half year figures of 2023. The CEO, Peter Schneck, will give you a presentation on the results in a moment; and the floor will be opened for upcoming questions following the presentation. With this, I hand over to you, Mr. Schneck.

Thank you very much. And good morning, everybody. Thank you for joining the earnings call of CENIT AG this morning. As usual, I will run you through the session in English since we have several English-speaking analysts and investors in this call. As usual, I will present to you our figures and findings with some background information at the beginning. And then of course, you will have the opportunity in our Q&A session to ask any question; and I hope that I can answer those questions. So let's right now jump into our figures for the first half year, which in my opinion are very promising despite the economic environment in -- at least in Germany. So if you look at our sales figures, you see a major increase of 18.3% from EUR 73.9 million to EUR 87 million this year. This major jump has, of course, several reasons. Number one that we have to point out is you will have, the first time, the consolidation of ISR since we consolidated them since last year, June. So there's 5 months of ISR included. And of course, there's mip, our acquisition that we did beginning of this year which is also included since February of this year, which represents of course also a major portion of this sales increase. The second reason for our -- for this very nice increase is, of course, our organic growth. I think this is very important to mention since we had for many years a kind of [ side work ] in our figures, at least in the base figures. And as you know, there were not so many acquisitions in the past, so even our basic organic business is growing. And as you can see here, the PLM business is included with organic revenue growth of 6.1%. The PLM is, of course, SAP and especially Dassault, so what we see is a major increase in activities in the digitalization of many of the production processes. And of course, we were able to sell more Dassault than in the past. And I would like to mention here the French team of KEONYS. They even came close to 10% organic growth just in the 3DS sector. So there you see there's quite some activity in the French market but also in the German market despite the economic environment and maybe also typical German bad-mouthing of our industry, but there is a lot of activity, so this is very promising, very nice. One of the reasons also why our PLM sector is moving that far: As you know, we had some measures that we implemented, the cross-selling as well as, of course, some changes in our teams to make sure that everybody gets up and is now aggressive in sales. The second important thing for you and which you cannot see on this slide but as a background information, and you can see this in the half year report, the extended one, is of course also the sales or the revenues by regions. We have major increases in the European and in the DACH region because, as you know, as I told you, this is the area that we want to focus on. And we have deconsolidated Asia. It means especially Japan deconsolidated because of our sale that we did to the -- being effective to the 1st of June of this year, which related to 87.9% decrease in sales in the Asian market. And also, in the U.S. market, we had a small and slight decrease of 9.2% in sales since the system monitor of IBM was booked already in the last quarter of last year. That's why you don't see the revenues in here. So what you see is a major increase in sales in Europe and especially DACH, so our strategy and focusing works out pretty well and, I think, is paying off. Then of course, what you also see is we have on the EBITDA figures a major jump of 70.1% of EUR 3.3 million to EUR 5.7 million. And what you have then, of course, also seen in the figures, that we had, due to the PPA of ISR, a higher depreciation and amortization in 2023, so far in the first half year. So I think this is important for you to understand, yes. And another thing that we would like to point out on the sales side, important as well. The EIM sector is more than doubling the revenue, but this is related, of course, to the acquisition of ISR and mip. So both are counted under the EIM sector overall. And as you will see on one of the coming slides, EIM is a little below our internal plan but doing pretty well and, I think, growing as well in a promising way. If we then look at our EBIT. I think this is a major jump, as you can see, and there are several reasons for this one, from EUR 1.1 million to EUR 2.62 million in EBIT, which is 134% of increase. As you can see here, we're not showing higher than 100% because then it gets ridiculous, but anyhow -- so that you know the figure. And you will also see the real percentage figure in our extended report. One of the reasons for this is, of course, the organic growth that is paying off here and contributing to our EBIT. The second effect is, of course, also the OpEx. So we had reduced our OpEx, as you've seen, like-for-like because of the acquisitions. You cannot maybe see this in detail, but we have started our project Sirius, as you know. There are slight effects of Sirius already reflected here in those EBIT figures, but the truth is the full effect will come only in Q3 and Q4 because we have implemented those measures. And of course, we also had some savings on the staff side, which down the road will pay off only in the second half of the year. Then of course, one of the contributors is definitely the ISR and mip consolidation. So they are consolidated for the first time. And then of course, what we also have to mention is there is an effect in there because of the deconsolidation of CENIT Japan which we've sold, as you all know. And this effect is in the area of about EUR 800,000, so even if you reduce this, you will see that our EBIT increased more than 50% if we would take this out. So I think it's a very good step in the right direction. You all know that we have the target to achieve 8% to 10% in 2025 in EBIT margin, and I think this is step forward. And from the second half of the year, we will, of course, expect that there will be -- since this is our strongest half year, that there will be definitely enough contribution to achieve our EUR 9.5 million that we have scheduled for this year. I'm not showing any and also not changing the guidance at this point of the acquisitions since we have some effects also of IFRS which we still have to build in. And I assume that it will come up in the second half of the year with some further adjustments to the guidance, a positive one. I also would like to point out: You've seen this. Or some of you might have noted this in our press release as well as in our extended version of this half year report, that we have closed the small guidance rate where we said EUR 9 million to EUR 9.5 million in EBIT as well as EUR 175 million to EUR 180 million for this year. We extended this to the figures that we have already mentioned by the beginning of this year because we're very confident that we will at least achieve those figures. I'm sure that, also already because of the acquisitions, we will definitely be above the EUR 9.5 million, but again this is not a guidance. And at the moment, it's EUR 9.5 million that we are mentioning. Then of course, the EPS, as a consequence, as you can see here, a major jump, EUR 0.046 to EUR 0.185 for the half year result, which is I think also a very nice development [ for the organization ]. If we then go a little further into those figures. Some of them, I mentioned already. That's why I would just like to point out some of them. I think the 31.5% increase in gross profit is something to mention, which again is of course an effect of our increased sales; and mip profit; then of course, the profit of ISR; as well as, I just have to mention and to express it every time in a little bit more detail -- is the organic growth, which is something that I love to see and then, of course, that we will continue to do. Then the next point that I would like to point out is the order backlog. You see here also an increase of 18.4%. Again one effect is, of course, the additional sales of ISR and mip. That also included [ part ]. We also see order -- a backlog increase in our core business. And we have acquired [ a filled ] pipeline, especially in the SAP area as well as in 3DS, where we see some major deals. We are currently in a situation that we would say it looks like that CENIT is at a point where we are also getting access to much larger accounts than we have handled, so far, so if one of those comes -- and there are several of those in the pipeline, so the probability that we will hit one of those is pretty high. We will at least exceed our figures in the area of 3DS as well as SAP and also DBS which is our services area, so they are already ahead of plan. At the moment, the EIM sector is kind of flat. And the DFS sector is improving, had a very strong second quarter but is still struggling. As you know, we're doing here some improvements. Then to mention is the cash, as you see, similar to last year. So we keep it on a very good level here. Basically, as last year, you see a slight change in the equity ratio. Please bear in mind that this is year-end versus half year, so this column, as you can see. And of course, there's the dividend payment included which, of course, relates to this, so by the end of the year, I expect us to be in the same equity ratio as we were by end of 2022. Then very positive to mention is the free cash flow which is at EUR 7.4 million. And last year was negative, but if you look at the CapEx line, you will see that there is the EUR 26 million investment for ISR included that we had last year, which of course is -- this year didn't happen, so far. So this is, of course, a major impact on this one. And if you look at the operative cash flow, you might come up and say, well, it's a -- it's like-for-like, almost like last year, although that they have a much higher sales. Please bear in mind there is the deconsolidation of Japan included; and of course, the interest that we have paid for our credit line for all the acquisitions; and of course, also additional costs. For acquisitions in the first half year, we've spent, so far, about EUR 220,000 just for the consultants, legal guys and everything in this area, so if you reflect this one and have done the counterchange, the operative cash flow is even better than last year since the margin [ or the relation is in the same end ]. So pretty promising as well and going into the right direction. If we look at the sales by revenue type, you see, of course, a major jump of 57.5% in the consulting services from EUR 22.2 million to EUR 35 million. Reason is, of course, ISR, mip included in this one. So again 5 months of ISR and 4 months of mip included in this. And you also see an increase in sales of the third-party software, which is mainly of course the Dassault software. So also here you see a hit of 2.5% increase. As I mentioned before, we're a little below in our own CENIT software, and the reasons here are DFS and EIM. EIM had last year a deal that we don't see this year, but if you look at the same figures, you see that we are only EUR 300 million below last year, so this is nothing to worry about. And for the EIM segment, I also know that they're going to catch up until the end of the year. And we will, for sure, exceed also these figures. That is why I'm very promised -- promising, looking into the future and don't see any area -- any problem in this area here. If we look at the segments, there you see, of course, like I said, EIM is driven by ISR and mip. And the PLM sector, this is real organic growth, which I like to see. And this is also, for you -- for understanding. This is above market, the PLM segment, if you look at the [ sim data ] figures and if we look into our upper segment, so you cannot compare the real full figure for the PLM sector which is considered by [ sim data ] in the area of 8%. We're not selling SolidWorks -- only in France, but in the rest of our areas, we're not selling SolidWorks. And if you bring it down to the high-end 3DX and 3DS segment, then you will see that -- which is increasing by about 4-point-ish percent per year, that we're even above at this level. So again very promising and looks like that we were able to wake up this division and push them into the right direction. Very brief because this is Q2 only. So this is just 1 quarter, but you see that the second quarter has been also very strong. We had here the 70.3% (sic) [ 73.5% ] EBIT jump also driven by, again, Japan. Always bear this in mind, but even without this, this was a major jump that we had in EBIT. And of course, you also see the increases as you've seen before for the full year, driven on the consulting services side and also the third-party software. You see here that, the second quarter, the team is already catching up. Like I said, DFS had a very strong quarter -- or the second quarter in selling their software. And there, as we can see, the difference is only 1.6%, so the team is catching up and heading into the right direction. Just to give you some customer highlights, what we've done; and that you also see a little bit on how we're moving and which direction. You see Safran Aero Boosters. It's a 3DX deal that we've done, a major deal where we're talking about defense. As I've told you, there is more and more defense upcoming. Unfortunately not in Germany, but in the rest of the world, we are more and more involved in defense deals. Then our classic business: luxury car manufacturer in the U.K. that is -- that has taken the decision to do with us the 3DX experience and SAP connection. So this is mainly the SAP team that is doing here the work. And then the German premium car manufacturer [ with a star ] is working since many years with FASTSUITE Edition 2, which is the DFS sector, and extended their contract. And it looks like, if we're doing this job, good. And it looks like, at the moment, that we're doing it very good, that we will sell this solution to all their production sites worldwide, so this will be a major boost also for our DFS department and finally push them into the profitability. Then a company -- this is not just a reminder or a book holder here. As you see, this XCMG is the third largest construction company in the world, a Chinese company which is also using our DFS solution, so -- on their robots. And there we are also -- we've sold several licenses. And we're hoping that they're even using our solution as a white label on their bots for the future, which would be also a game changer for the DFS sector. Then coming to the next -- to the second quarter. We had, as you know, in our strategy -- I told you also several times I'm trying to push the team also into other segments so that we're leaving a little bit automotive and aerospace. And what I mean by this is I want to, of course, increase the revenues also in those areas, but I also want to make sure that we have new segments that we enter and where we do revenues. And we were lucky in the second quarter to sign in France with a local energy provider. We're selling them a product which is called Ortems, which is also a Dassault product in the 3DS -- or 3DX world, so we're very successful here. This is also a big deal in a complete new segment that we haven't touched in the past. The same applies to the left -- to the right side, as you can see here, the key player in pharmaceutical manufacturing, also a complete new segment, where we're able to sell SAP solutions for the connection to 3DX as well as Ortems. So this is for us also entering into a new segment. Then SAP team was able also to find a leading supplier for collaborative solutions, where we sold our Ortems and PDMI solution to and, finally, also a complete new segment that I'm coming from. As you know, in my past, I was working for Trapeze, transport made easy, a large company handling worldwide mobility solutions and handling all the transit organizations. And here we have one transit organizations that decided to enter with us into 3DX and MS Dynamics, which is something that we are supporting but we're so far not the leaders in this area. But as we have announced some weeks ago, we acquired a company called PI Informatik based in Berlin. And they are gold partners specially focused on MS Dynamics, so this is a great fit for us and, I think, shows also how we're changing and heading our portfolio in the right direction so that we can cover much more demands of our customers. So coming to our strategy, where we are at the moment; and maybe also giving you some insights on our organic and inorganic growth. You've seen that we had some acquisitions that we have done, ISR at the beginning of last year; then Coristo; and of course, Magic; beginning of this year, mip that joined us with about 30 employees; then PI Informatik, as we mentioned. And as you can see here as well, there's another -- sorry. There is another team mentioned in here as closing 31st (sic) [ 31st July ]. We have acquired yesterday a company; and you've seen this also in our extended reporting, half year reporting. We haven't mentioned the name yet since we will meet the team only tomorrow. So I'm flying out tonight to meet the team tomorrow and then, of course, also to make them a part of CENIT. And we wanted to make sure that they hear it first from us and not through any press releases, so that's why I kindly ask for your understanding that we don't mention the name here, but what I can tell you is it's a company in a size of about EUR 4 million revenue, based in Austria, 13 employees, with a network of about 70 employees in the SAP sector. So what you see here is, after we've done EIM, we're focusing now on SAP. And in the pipeline, we have another SAP company, a 3DX company; and a major deal for DBS, so a digital business solutions services company that we're looking into, that we would like to do in the second half of this year. So you see we're growing. We're going forward. And I think we're making sure that we will hit our EUR 300 million goal in 2025. Another thing to mention because I've seen in some of the chats in the Internet as well as on other media there was a kind of confusion on our costs, on our personnel costs. Please bear in mind, if we look at the figures, that you are comparing now figures of last year, where we were about 600-ish employees, towards 863 now because we're adding mip and ISR for the first 5 months. So this is about 230 more employees. And if you look at this like-for-like, you would see in our core business we have even reduced our staff costs or our personnel expenses; as I had announced, that we will do some changes in our team, and this has been very successful; and even increasing by about 4% in Germany our salaries, and in the other countries same manner. But -- and the major portion is in Germany and in France. So they were in the same range of 4% to 5% increases. And the onetime payment, beginning of this year at least in Germany, for the inflation coverage. We are still below last year personnel costs. Then if you add this one, you will see that this is increased, so I think we're doing pretty well also on the costs side. As I said, mip, beginning of this year, data specialists in the area of EIM. So they're part of the EIM team and also consolidated into the EIM team. They have large and a lot of smaller accounts. One large account is Mercedes that they're covering. So this is a high-end team where we can also charge higher daily fees. And we're hoping to expand this team by further acquisitions but also new team members that we will add to this team. Then the second one, and I haven't reported about this yet other than in the press release that you've seen, is a company called PI Informatik: based in Berlin, about 30 new team members, in the area of EUR 3.5 million to EUR 4 million revenue. For this year is planned EUR 5 million revenue, so this team -- the decision why we've acquired this team is, first of all, they're specialized on SAP, so again adding to our team a new expertise. Second thing is, regional-wise, we were not really present in Berlin. We have 16 members in Berlin; 2 of them really sitting in Berlin, in an office. Now we have a real presence in Berlin. And the last reason why we acquired this team is, of course, they also have access to the public sector. And they're supporting the German parties -- or the political parties as well as some of the government on a state level as well as on local levels. And this is for us a very nice entry with other portfolio portions that we have on our team. So this is the reasons why we acquired this team. And as I mentioned, and I'm not showing this here, but would be -- in a week, you will also see this extended, is of course, what we call it, the company in Austria which is also in the SAP area and will boost us because they have -- in their network, it's only 13 employees, but they have about 70 team members, highly skilled SAP employees that are available for us, in their network that they are using. This is why they were just 13 employees, can also achieve about -- up to EUR 5 million revenues. So this would be something that is very interesting for us also to basically de-block our bottleneck in the SAP area. We have in the SAP area large customers pushing us, waiting for us, defense and automotive sector that at the moment we cannot cover because we don't have the team, so by having this access through the Austrian team, we hope that we will again boost our sales in the SAP team. And like I said, I expect SAP will bypass or exceed their figures that they have planned for this year. So just to give you again the idea on how we want to go there. And I would like to point out just one point. You are familiar with this thing, but we have extended it by year 2021 and year 2022 because this is my starting point where I joined the team, end of 2021. You see that we increased our revenue by 11%. We're increasing now -- or we increased by 17% in this year. At least 24% increase is planned. You see here the figures at the moment that we are potentially may be going forward. Again this is no guidance. This is not a 5-year plan, but it includes, of course, some of the acquisitions. And there are some other acquisitions in the pipeline, but I just wanted to show on if we continue this path as we've done. And there is a slight change because we had here about EUR 200 million in there for this year. We still have them in the pipeline. Because of the consolidation effects, there will be a kind of rollover into next year. So that you're just aware of this, that's what I just wanted to point out. It's no change in our planning. It's no change in the guidance, EUR 180 million at the moment, yes, but this is the direction that we're heading to. And the same then, of course, applies also to our EBIT figures, for those who have followed this. Then finally coming to our share information. As you've seen in the past days for the -- I think, for the whole peer group, it was quite difficult the last months, a lot of investors leaving into other directions and maybe going for the large accounts. I hope that this will invite a lot of investors also to invest now into CENIT with those figures; and the promising second quarter, which is our strength -- second half year, sorry, which is our strongest portion. I think it's a very clear indication on where we're heading to. And finally, I would just like to point out there are no changes to the shareholder structure as of today. And as you can see here, the analysts, also there was -- there has been no change, so far, to our recommendations or forecasts of the analysts, as you can see here on the slide. So that's it, so far, from my side. I think, in a nutshell, as I can say, very promising figures. We are facing a very promising second half of the year. There will be effects on EBIT, positive ones, but of course, don't now multiply. There's an effect from Japan that has to be considered. Of course, there will be similar effects also in the second half of the year that you will see. There will be Sirius on top, so there will be some savings in this area. We're heading about -- for EUR 3 million and you will see something in the second half of the year, yes. At the moment, it looks like that we will meet our goal, so I'm very confident, EUR 180 million. And EUR 9.5 million EBIT is confirmed. This is [ what we're ] heading for. And yes. Tomorrow, there will be -- no. On Thursday, there will be an announcement of the acquisition in Vienna. So I think we're heading into the right direction. So now I will say -- I'll leave the floor to you so that you have enough time for questions.

[Operator Instructions] We will start with the questions from Yannik Siering.

All right. Can you hear me?

Yes.

Great. I would have a couple. Maybe starting, some housekeeping. Could you state the total M&A costs, please? I think you mentioned a number for legal and consulting, but maybe you could repeat that.

Yes. Well, the total M&A cost is EUR 220,000 in the first half of this year, so far. And of course, there will be invoices coming for the deals that we're working on, but in the figures that you've seen in here, there's EUR 220,000 included. And then of course, there's about EUR 535,000 included interests for the first half year.

Okay, great. And then the next one would be in terms of customer demand. You talked about different sectors. Maybe you could shed some light on which industries at the moment are the most robust in your perception. And maybe, in which industries do you see customers turning more cautious?

Yes. So the one that is very robust and where we see an increasing demand and where in the past we were maybe not that present is definitely the defense sector. We also have in Germany customers, of course, that have an increased demand but not the way as we would like to have it or that somebody would expect with a EUR 100 billion package in the background. Again, none of our customers as of today has really an order from the German government, so what we see is more likely the French, some U.K. and especially the U.S. defense sector that has an increased demand. And that seems also to continue for the second half of the year. We were in the middle of some of those discussions. We also have some switches from existing customers. And I'm just saying I think I'm allowed to name this: Airbus, as you all know, has also a defense sector. And we're now entering into also the defense sector that in the past we have not covered to that extent as we're doing now. Then the next one that is also -- that has an increased demand and what we do a lot of business with is the automotive sector. And there you have to split into definitely increased demand on the manufacturing side, so all the big brands, as you know, in the automotive sector. What we see is a decreasing demand or, let's say, difficulty in maybe spending money or finding the right ways on how to do this. A little bit reluctant is the suppliers of those manufacturers. So they are reviewing the budgets; and then a kind of twofold situation because, on one hand, they have to invest because they want to optimize and, of course, decrease their costs by automizing their production. And on the other side, they are struggling because [ there are nobody heading to ] on the car side since more and more electrification means that there's less parts needed at the moment. So this is a kind of, I would say, difficult situation that they're in, but overall, automotive is increasing. And then as you have seen, since we also pushed it maybe into this direction or opened the door for other segments, there we see also complete new segments now that are upcoming. There is an increased demand on the public sector. And especially now since we've done the deal with PI Informatik, we hope that we can push this and also find some new segments, but this is, I think, a very upcoming starting plant that is not that fast growing. And then of course, the classical manufacturing is growing as well. We have a lot of companies that are pushing into digitalization, especially in Germany and in France. You've heard that we have an organic growth in France of close to 10%. It's 9.8% as a correct figure compared to last year. And this is, of course, also new things like you've heard, energy sector and others as well as flying whales. Our existing customer that has done a major extension of the system [ sold ] flying whales. It's like the cargo lifter that some of you might know with zeppelins transporting certain things. So these are the sectors where we see a lot of boost. And at the moment, I can just say my problem is not to get the books filled. My problem is to transfer the orders into the real production mode, means I'm struggling with the bottleneck of right staff members. It's not that we cannot find team members. The problem is that we have challenging customers where I need team members that are already on this challenging level and not only in 6 months or whatever, so that's why, again, I'm a big fan of the acquisition where we already have specialists in a certain area and can use them right away from the first day. But you can imagine, if a customer like Jaguar Land Rover is pushing us, that they have a certain expectation and they don't have a lot of time, so we don't have time to build up teams.

Great. That's very helpful. And then maybe another one, on the proprietary software sales. We saw a slight decline in H1. And what is the expectation here for H2?

For H2, it's definitely that we will have an increase, that we will be in our planned level which is above last year. So there are 2 reasons. Q1 was difficult for DFS. They were below plan and also below last year figures, and they catched up quite a lot in the second quarter. And I'm very confident that they will also for the third and fourth quarter catch up. And definitely, the EIM sector: In the EIM sector, we have some promising large customers in the pipeline. We had a -- we always have in EIM, and it's maybe even more difficult than in other areas. EIM is a Q4 business, to be honest, where we have a lot of customers [ with this that ] spend their money. And we have this major hockey stick especially here, so that's why a small shift, like you've seen, [ of ] 300,000, are just missing. So this is one or the other project that has maybe shifted or not coming the way as we expected this, leads to those figures, but again I'm not worried about this. It goes into the right direction. And as you all know, my goal is to push the CENIT software sale to increase our margin, so this is definitely that -- something that we're going to focus on in the second half of this year.

Okay, great. And then one last one, if I may. You have been onboard for some time now. Now looking at the mid-term goals, especially the EUR 300 million top line goal, could you share your view here on the progress you've made, so far?

Well, there's always 2 sides. I would like to be faster than I am. And on the other side, I have to make sure that the team can do this and that I'm not overstretching the team. And I think that we found a pretty good -- a balanced level. I think that we've done major steps forward. A lot of team members in -- within CENIT but, I think, also outside of CENIT thought in the beginning that we would never make it and that we would not be that fast. So it's in-between. I think we're absolutely on -- or in-line. Me personally, I would like to be much faster. No doubt about this one, but there's another 2.5 years to go. And that's why I'm very confident that we will get there. If we -- if you see the plan as I've shown you here: If you have one or the other acquisition -- and we've looked at those kind of acquisitions. They had one acquisition of about 87 million revenue on top -- we would be already there. So we had, so far -- and this is also something that you have to bear in mind. I said right from the beginning I will make sure that I'm not overstretching the team. We will not start with very large acquisitions. ISR was a large one, but besides this one, so that we could focus on ISR, we only did smaller ones in the area of 5 million, 6 million additional revenue. And also, this year, you'll see this so that the team gets familiar with acquisitions. I feel very comfortable now with the team. And I think that the team is ready also to do another larger acquisition, in the area of ISR or maybe even larger. And I also feel comfortable now to look at the North American market. I was also a little reluctant since I've done many transactions in the U.S. in the past and I know that this is quite challenging and a totally different animal with very professional sellers. We have to make sure that we're not running into a trap. And I feel now very comfortable, with the team, also to do an acquisition in the U.S. maybe next year or the year after because this is definitely a growing market. And as I mentioned before, we have to expand our footprint in the U.S. We have U.S. defense companies that are pushing us. At the moment, we have 19 employees in the U.S., which is ridiculous to support one of those U.S. defense animals, so we have to make sure that we get a presence in U.S. And we will get a presence in the next 2 years, for sure. And I feel comfortable with this, so overall, I'm fine. We're heading towards the EUR 300 million. And one or the other acquisition can be the game changer and we're maybe there even earlier than we have planned.

We now continue with questions from Hannes Mueller.

I will have one follow-up question. You've already touched upon this, but if you're looking at the drivers of the PLM segment and particularly about in terms of growth and in terms of profitability, what do you see as the main drivers? And also, well, could you say there are certain decoupling of IT spending in the manufacturing sector from growth or underlying demand developments? Or do you just, well, attribute this to, as you said, people are saying it's worse than it actually is? Or maybe you could add some color on that.

Yes. Thank you very much for your question, Mr. Mueller. It's difficult to say because I also have -- or I assume I have the same crystal ball as you have it on the table to say how it's going to be in the future. What I can just say is at the moment what I see. One of the drivers in the PLM sales and then also profitability is that definitely, most of our customers, they see the need for the digitalization now because, without the digitalization of your production, you cannot automize. In Europe, I would say we have 2 challenges. And there's -- challenge number one is, of course, the lack of staff. So the war for talents, you all noticed. We have less and less qualified people, which leads to automation. And the other challenge is, especially in Germany, for the production or manufacturing companies, we have increased costs in electricity and gas and all those kind of things. So the only thing you can do is, if you're not living in Germany, which some of our customers do, you still have to automize and to push this. And this is why we see an increased demand into PLM, because it allows you to save costs; and the prototyping and all these kind of things that you can do now virtually and you don't have to do it in reality, which basically saves you several days and weeks of your employees and, at the same time, the acceleration to -- yes, to get your product out there. And we also see an increased pressure, especially to the German, but I think also the French industry is not in a much better shape, that we have to catch up with especially the Chinese manufacturers and the Chinese companies. And this is now the fight that all those companies have gone into, and this means digitalization is their challenge. They have good staff. They have highly qualified engineers. And I think this is the battle that we have to win. I'm not that negative as maybe some in the industry are. I know, and of course I hear this also through the grapevines and read it in -- every day in the newspaper, that there's a struggle for the companies, especially in Germany, but I think this is the new normal. We will always have this kind of struggles. There is now -- in China and also the U.S., there are competitors that are at least on the same level, maybe even on a [ higher high ] level. And this is why this is the only way how they can go forward to achieve their goals and to be competitive. The IT spending. I wouldn't say that it's decoupled. What we see more and more is that the IT spending is included or it's seen now more on a holistic way than it was in the past. In the past, IT spending was you make your infrastructure. You get your cloud and all these kind of things so that your company is running, and this was decoupled from the production process. I think now the companies -- and especially also, on the C level, we're getting more and more invited by C level; that they are looking at it from a holistic way and are saying, "Okay, so what is needed? What do I really know?" And that's why the spending is out of one big portion which includes, of course, IT and manufacturing pieces, but it's more and more combined than decoupled, so that's why also we -- in many cases, we don't see a budget problem. We see capacity problem in the companies to have the right people that run such a project. And of course, what we also see is it's a timing issue. They want to do this much faster than the reality is. And this puts them quite under pressure, but again there's a certain implementation time that we cannot speed up. And I think the European industry is catching up. That's the mode how I would describe this.

Okay, great. And then maybe one more question, on H2 profitability, especially in PLM. What do you see as the main drivers? Is it cost saving or project mix? Or what's your view on that?

Well, on one hand, it is definitely cost saving. You've heard that we have this project Sirius which also includes the PLM segment, of course. I want to increase the utilization rate of our team members. Since we're lacking enough resources, we have to make sure that we are using the ones in a much more intelligent way than we did in the past, which means it's -- on one hand, it's cost saving or maybe better scaling, however you want to see this. So that's one portion. The second portion is what we also see is, despite the pressure that the industry see, we are in a lucky position because of the time pressure that they have and the speeding, that we can charge our daily rates without major discounts and in some cases even better daily rates than we typically have included in our plan. That's why I'm very confident, again, that we will hit the EUR 9.5 million. At this point, I will not give any new guidance or any new information, but I'm pretty confident that we will hit those figures.

We continue with questions from Christoph Hoffmann.

Just 2 quick follow-ups from my side. I noticed that only 18 out of the 30 mip employees are still there. So it seems like almost half of the staff has left in the last 6 months. Is this correct? Or do they work just in other parts of the group now?

Where did you get this 18 from? Because nobody has left. We have added team members to the mip team.

I read it in your report that you published today.

Okay, well, if this is the case, then this can only be that we've shifted them into the ISR team or into the CENIT EIM team because they're considered all as EIM, but so far, we had no people leaving from mip. We have added 2 team members to the mip team because there's an increased demand. And there's no reason for us to fire people; or the other way around, since we have still the management there onboard. Nobody left. They're all there. They feel very comfortable with the situation. They're all very happy, highly motivated. They were also very happy by the decision of [ Ula ] and Markus Ruf with their sales and with their choice of CENIT, so they even got presents from the team for this great choice, and flowers and all these kind of things. We recently just had a big party with those guys and introduced them also to the other team members. So I think it's maybe you have -- either we have expressed this not in a good way or maybe you misread it, but overall the team is extended by 2.

Okay, okay, yes. I thought so. It's written on Page 11, so I think it's just a -- yes, that's misunderstanding, okay. So the second question is on the recent acquisition you did. Maybe, if it's possible today, can you already give us a little more information, especially in terms of the EBIT margin and the price you paid?

Nice try, Mr. Hoffmann, but as you know, we never -- if we don't have to, for legal reasons, we're not disclosing the prices that we pay, so -- and maybe just to give you a little bit of background information: The team is based in Vienna; and like I said, 13, plus 70 in their network. So they work as freelancers and they're not willing, at least not at the moment, to join the team completely, so what we have acquired is 60% of this company. The company is -- well, the other 40% of the shares are held by the managing director, who we want to have onboard at least for the next 5 years. So he is the one who has special relations to the Austrian large customers and also in the mobility sector as well as in the industry sector, so it's very much important for us that we keep him onboard so that we can transfer his relationships and everything into us. As you know, Austria is a relationship country, so even more than in Germany and maybe France, it's very important that you have these long-term relationships to be successful; and this is what we want to ensure. That's why he stays onboard. The company is in the area of about EUR 5 million revenue, total revenue, which of course we will only consolidate now starting by 1st of August, so by today. So there will be a certain portion that comes on top. Now what we have to see is, under IFRS 15, what we can consolidate or not. As you know, there's -- if they are selling some licenses in some cases, that's this [ principal-and-agent ] question. The revenue that you see is not the one that we can fully consolidate and book into our figures since we are under IFRS and this company is still under the Austrian HGB. They are highly profitable. I would say above 10% EBIT and which is in line with what I always say. We don't acquire companies that are below 10% EBIT. So other than that, I cannot disclose. Also, for competition reasons, I don't want to disclose what the EBIT is, but it's a nice EBIT portion that we get here onboard. And again for us the very important thing is that we are present now in Austria with our own team in the SAP segment. We will work now closely with SAP. This was also aligned with SAP. They are pushing us into the Austrian market because they need somebody who's supporting SAP also and entering into the manufacturing businesses, so even the high level of SAP is aware of this acquisition and looking into this one. It looks small, but it's key. And again it allows us to roll in our Trojan horse with all the other portfolios; and to increase sales, yes, also for the other teams. And I would love to do the same thing in Switzerland, to be honest, so hopefully, we can find a kind of synonymous company in Switzerland in the future as well; and then maybe also in U.S. So there you see a little bit on how we do this. It's very regional this year and it's a strategic key acquisition that we're doing here.

We continue with questions from [ Lukas Spang ].

I would like to follow on, on the Sirius effects you mentioned before, which are now kicking in, in the second half of the year. Can you quantify this effect?

I can tell you that the overall total Sirius effect was planned to be about EUR 3 million savings for this year, which we had also included into our figures. About -- well, less than what you see now, as an effect of Japan is, of course, included in this. So the EUR 800,000-ish is included in this EUR 3 million. We have now maybe an effect of about EUR 200,000, EUR 300,000 that you see in the first half year. And the rest is to come in the second half of the year, which is mainly savings in staff; savings in licenses which we have discontinued because, as you all know, when you are 35 years in a company, there's licenses, when you dig into this one, you don't find a user anymore because he left 20 years ago, but we're still paying licenses. So this is all this cleanup work that we have done. Then there are some other effects, as you've seen, [indiscernible] and this kind of thing, that I included where we've sold a building. This was the last real estate that we have in our organization. So these are all effects that you will see in the second half of the year. And not all of these effects you will see in the EBIT line because some of them are also below, like, for example, sales of real estate, but attached to these ones are, of course, the savings because then you don't have -- less management time and other costs that surround this. So for the second half of the year, we will achieve those effects. That's definitely for sure, but they are included in our EUR 9.5 million, so [ Mr. Spang ], this is not EUR 9.5 million plus [ 2 ]. I would love [ to do so, but that's not the case ].

But the EUR 800,000 from Japan will be a onetime effect.

Yes, absolutely.

And then on the personnel [ kind of base ]. If I compare the numbers from the Q2 report with the numbers of the Q1 report, we saw an increase in the personnel base. So is this now base also for the second half of the year? Or what is your plans in -- what is your plan in terms of the employee base?

Well, with any acquisition that we do, we will, of course, add. That's for sure. Then of course, we will add also some additional team members. We have -- at the moment, we're about looking for another 43 employees that we would like to add, which is then also resulting in higher sales and then also profit, so -- or hopefully, yes. So that's the idea, but other than that, I mean, what you have to compare is when you see the figures when we do the like-for-like comparison. Without the acquisitions, our personnel costs are below [ that ] last, year, although that we have increased, like I explained before, by the 4% in Germany and about 6% in France and I think 11% in Romania. So despite this and despite the onetime payment, so -- for the second half of the year, I expect the costs to be in the same range, which would then, by the end of the year, like-for-like be below of what we had last year, but of course then, with ISR and with mip, you have always to see that there's a certain wash. But the 600-ish that we have compared to this, they are below. So what I call the core CENIT, the costs are below despite the increases that we've done, which means that we lost some team members or [ make them lose ]. As I said, this was part of our [ problem ].

Yes. And then on the proprietary software business, you also mentioned in the Q1 call that there were some delays. Now you had some further delays or again some delays. What is behind this delay in general? Because there seems to be a -- like kind of recurring delay that customers are pushing their orders. And can you quantify, how big was the delay?

What I can tell you is -- [ Mr. Spang ], is that I'm always talking about the delay, but the truth is, when we did the planning, the EIM team, they were in the acquisition or in the onboarding phase of ISR. And what they have done is they have split last year's revenue by 12, so that's why we are now running behind the plan or behind the figures. Because what we see is that, by the end of the year, like last year, we have the hockey stick. And they haven't planned correctly the hockey stick. They have plans just on a regular steady base, which is not reflecting our business, so this was a, I would call it, planning mistake, if you want to say so. And in the third and the fourth quarter, they're catching up with this because this is the normal business as we've seen this in the past years. On the DFS field, we were really below. And as I said, we caught up now in the second quarter but not completely, yes, so there is still a gap, but honestly, I prefer to have the gap on the revenue side because they're heading into the right or then better than planned in OpEx. So they are focusing more likely on profitability than on revenues. And again also here, as I mentioned before, there are some very nice opportunities in spreading out our software to existing customers worldwide on the global manufacturing processes, which would then, of course, be more than a catch-up. So this is what we're going to see in the second half of the year. And that's what I called the delay, but the truth is it was a planning that was basically done by -- divided by 12.

And then this topic is mainly related to the ISR or EIM business.

Yes. That's the EIM business. And there also what you have to see is also to support Andre in this area. We have also shifted team members from CENIT EIM into ISR because, as I always told you, and I think we both had a -- had several times a discussion about this, I wanted to make sure that we're not [ infecting ] the organization, the well-running organizations, like ISR by maybe slower or however you want to call this old CENIT organization. That's why we picked the key players and shifted them into ISR [ end ]. So all of this was quite challenging in the planning process, which led to this, yes, easy planning, let's call it this way, by just dividing it by 12.

[Operator Instructions] In the meantime, we received one question via chat: if you can, please, Mr. Schneck, clarify, quantify the H2 building blocks to help build the bridge to your EBIT guidance. Meaning, how much EBIT contribution would you expect to come from M&A, project Sirius, deconsolidation in Japan, staff cost savings, et cetera?

Okay, well, like in the past years, the main driver is, of course, revenue and, then of course, the margin attached to this one. In our business, as you've seen this in the past years, we have still this major hockey stick at the end of the year. We're getting better because, as you all know, I would love now, by the [ SaaS ] business, that we're going to see this spreading more and more so that we really have -- well, we never have a flat revenue over the whole year, [ by 12 ], but at least that the -- this hockey stick is not that high because it makes it also very difficult for my team and myself to really come up with a reliable figure. And as you've seen in the past 2 years, it was always difficult. In the last weeks, there were deals coming in or not coming in, which led them to certain gaps or exceeded extremely, like in 2021 where we exceeded dramatically in the other way, which was also a poor planning. And that's the thing. So this is the main driver is sales and the profit coming out of this increased sales. The second driver is -- as [ Mr. Spang ] just asked and mentioned now, is the OpEx savings that we have in -- identified in our team. As I said, project Sirius is about EUR 3 million, so the major portion will come in into the second half of the year. Then on the acquisition side, in our figure is a kind of included, of course, already ISR. So there's nothing that we're adding, but there is this portion from ISR. They have increased our EBIT, definitely. They're running pretty well. And again, ISR is always in an area of about 23 million to 25 million revenue. And math is pretty easy when we assume that they are above 10% their -- in EBIT. Their contribution is already about 2-ish million just in EBIT. mip is also, of course, nicely profitable, but it's in the area of 4 million revenue, so let's say 400,000 contribution. Then PI and now what I call now codename Vienna, they will not that much contribute because, if you look at it like-for-like, so [ with the war ], we have, of course, also the M&A costs against what they're contributing to, but at least -- I hope that they will at least bring in what they cost. So that's definitely a case, but there is nothing to expect. There is one in the pipeline that will definitely contribute on the major portion, but it's also not included in our guidance. So the question, I understand, is in -- is referring to the EUR 9.5 million. And these are the major portions of what we are facing here. And again I'm very confident that we will hit this. Any acquisition that we do on top is, of course, on top. Revenue is on top EBIT. And when I have a better view and sight on the PI contribution and also the Vienna contribution, then of course we might adjust our guidance, but if this is in a smaller portion, I will not do this. And so whether we do EUR 9.5 million or EUR 10.5 million, I think it's not a big -- I think, but I will let you know then definitely when I have a better [ eyesight ].

All right, thank you very much. As we do not receive any further questions in the meantime, we are coming now to the end of this earnings call. A big thank you, to all participants, for your interest and listening; and of course, to you, Mr. Schneck, for taking the time and answering all those questions. I hand over to you for some final remarks before closing.

Yes. First of all, I would like to thank you for your trust; and of course, your very nice and good questions that I also read also always as additional challenge and also a reminder on what to look at. As you all know, we have on the M&A side things in our pipeline, so there will be, of course, the -- there are things coming. And the other thing is we will focus on EBIT, so this is what we're going for definitely, but I think, as of today, I'm very confident. First of all, as I told you, the pipeline is full. And we have quite a lot of things. EIM and DFS are the ones that are below our internal plan, which is still above of what you've seen here, but there are still some work to do in these 2 areas. All other 3 areas, 3DS, SAP and also DBS, I expect them to exceed; and at least to wash if there is any gap in EIM or DFS, which I don't see as of today, but at least to wash it. And hopefully then, there will be also some surprises by the end of the year, so let's put some candles into the window. And by the end of the year, let's have a nice Christmas party, but I'm very confident that we will exceed the figures that I presented to you today. So thank you very much...