The UK has proved to be the bright spot for Proact IT Group in the firm’s second quarter, as other regions show the strains of coping with macroeconomic headwinds.
The channel player has issued its half-yearly report covering the six months to June, with revenues improving by 9.2% and recurring revenues from cloud and support services climbing by 17.1% year-on-year.
For the second quarter, revenues increased by 4.2% to come in at SEK 1,201.7m. Pre-tax profits decreased to SEK 34.4m from 64.7m.
In the UK, the numbers for the second quarter, April to June, indicated a 31.5% improvement in revenues. Currency rates have impacted the performance across the year so far, but a solid Q2 helped the firm offset some of the impact of a difficult Q1.
System revenues improved by 56.9% and the services side saw a 15.4% improvement, with demand for cloud fuelling that year-on-year growth. The consulting side of the business decreased due to slightly lower demand in the market.
Jonas Hasselberg, CEO of Proact, said the UK had bucked the trend with improvements in the systems business in the second quarter, and it remained a challenging market. “During the second quarter of 2023 we have generally seen good demand in several markets, although a few countries have seen a somewhat slower sales pace connected to the macroeconomic uncertainties,” he said.
“After several quarters of high organic growth in the systems business, the second quarter ended with a decrease of 6% and an organic decrease of 9% compared with a record quarter last year,” said Hasselberg. “All Business Units except the UK showed an organic decline, to a large extent because of a strong comparison quarter, and primarily in Germany, also weaker demand connected to the uncertain macroeconomic situation.”
In his comments accompanying the results, Hasselberg noted that the firm embarked on a cost-cutting programme, largely focused on trimming administrative expenses to help the business, and it was looking to save millions before the end of the year.
“This saving gives us room to invest in future growth in the markets, segments where we continue to see good demand and compensates for the inflationary cost increases we have seen,” he said.
Hasselberg didn’t have too much to say about the future, but commented that the firm was in a decent position and had the cost reduction programme already generating savings.
“Proact and our employees delivered a good quarter considering the market conditions and we are strategically well positioned for continued growth in revenues and profits going forward,” he said.
Proact hit the headlines earlier this week because its chief revenue officer Linda Höljö announced plans to leave, resigning from the role as chief financial officer and vice-president of Investor Relations for an external opportunity. She will remain in her role until her replacement is in place, albeit no longer than January 2024.