Cyient reports the Q4 FY 20 financial results

HYDERABAD, India, May 7, 2020 /PRNewswire/ -- Cyient (Estd: 1991, NSE: CYIENT), a global engineering and technology solutions company, today reported its consolidated financial results for the fourth quarter (Q4) of FY 2020 ending March 31, 2020.

Financial Highlights:

For FY2020

• Group revenue at $625.2 Mn (₹44,274 Mn); de-growth of 5.3% (4.0% in CC terms) and degrowth 4.1% YoY (₹ terms)
• Services revenue at $550.7 Mn; de-growth of 5.1% (3.7% in CC terms)
• DLM revenue at $74.6 Mn; de-growth of 6.6%
• Normalized EBIT excluding one-offs at ₹4,084 Mn; de-growth of 23.4%
• Normalized EBIT margins excluding one-offs at 9.2%; lower by 232 bps
• Normalized EBIT margin for services excluding one-offs at 10.5%, lower by 228bps
• Free Cash flow at ₹4,102Mn (highest ever)
• Free Cash Flow conversion at 56.9%
• Normalized PAT at ₹3,727 Mn; de-growth of 23.9%
• Total dividend for the year stood at Rs 15/- per share

For Q4 FY20

• Consolidated revenue at $149.2 Mn; degrowth of 3.8% QoQ and de-growth of 9.7% YoY
• Services revenue at $132.3 Mn; de-growth of 5.6% QoQ (5.4% in CC) and de-growth 10.0% YoY
• DLM revenue at $17 Mn; growth of 12.4% QoQ; de-growth of 7.1% YoY
• Cash flow to EBITDA conversion at 74.0%
• Normalized EBIT excluding one-offs at ₹905 Mn
• Normalized EBIT margin excluding one-offs 8.4%; lower by 118 bps QoQ
• Normalized EBIT margin for services excluding one-offs at 9.6%, lower by 100 bps QoQ

Business Highlights

• Signed an agreement with Hitachi Rail to deliver a series of project engineering services to support and accelerate the evolution of its signaling technology and enhance its project execution capacity in April 2020
• Mysore facility to support manufacturing of COVID-19 diagnosis units and X-ray system assemblies
• Providing Telangana State Police with drone-based surveillance technology to help implement the COVID-19 related lockdown in Hyderabad
• Contributed ₹ 20 Mn to the Telangana Chief Minister's Relief Fund to support the government's efforts in fighting the COVID-19 pandemic in April 2020

Message from the Management         

Commenting on the results, Mr. Krishna Bodanapu, Managing Director and Chief Executive Officer, said, "Our performance was below expectations both on revenue and margin terms largely due to the impact of COVID which was significant on many parts of our business. Our revenue for the quarter stood at $149.2 Mn, 3.8% lower QoQ in constant currency. Services revenue at $132.3 Mn is lower by 5.4% in constant currency due to de-growth in Utilities and Semiconductor businesses and was offset by an increase in the Aerospace & Defense business. The DLM revenue at $17 Mn was higher by 12.4% QoQ. Our Gross margin at 33.5% was lower by 248 bps QoQ with significant impact due to the shortfall in revenue. DLM gross margin at 13.3% was lower due to changes in revenue mix. Lower utilization during the quarter due to COVID preparedness also impacted the margin. Our EBIT margin was lower by 120 bps mainly due to a volume drop. For the year, our revenue stood at $625.2 Mn which is 5.3% lower YoY. Services revenue at $550.7 Mn was lower by 5.1% YoY while DLM at $74.6 Mn was lower by 6.6%. Degrowth in the services business was driven predominantly by A&D, Communication and Portfolio BUs. We are focused on accelerating business growth and have strengthened our leadership team with the appointment of Karthik Natarajan as the President & Chief Operating Officer and Felice Gray-Kemp as Sr. Vice President & General Counsel. With both joining us we will strengthen our focus on winning new business, especially in digital focused, IP-driven solutions and services. We will continue to strengthen our capabilities across business verticals and realign ourselves to achieve growth through these challenging times."

Commenting on the results, Mr. Ajay Aggarwal, President & CFO, said, "The revenue for FY20 stood at $625.2 Mn (₹ 44,274 Mn) with operating profit of $57 Mn (₹ 4,084 Mn) and normalized PAT of $52.2 Mn (₹ 3,727 Mn). Our sustained focus on collections led to a robust EBIDTA to FCF conversion of 56.9% and healthy cash balance of ₹ 9,518 Mn. We generated FCF of ₹ 4,102 Mn for the year. We are preparing to secure future in these challenging times with an aggressive cost control and optimization plan with primary focus on liquidity and cash. This includes rigorous initiatives on collections, working capital cycles, receivables, payables, and discretionary cost control. We continue to tap opportunities for automation, pyramid rationalization, subcontracting cost optimization and other cost levers. We expect our margins to strengthen in FY21 where the full benefits of improved operational efficiency will be visible. The COVID-19 pandemic has slowed down the positive momentum that we had seen building in the overall performance. However, we stay confident in our ability to embrace and adapt to the new normal and to get back to an industry-leading growth and profitability position over the long term."

Business Performance & Outlook

Aerospace & Defense 

Aerospace & Defense BU witnessed a growth of 4.7% QoQ and de-growth of 6.9% YoY in Q4 FY20 predominately driven by weak customer spend and impact of COVID pandemic from mid of Q4. For full year, BU de-growth is at 4.7% YoY. Services business is expected to de-grow through the year due to the global industry challenges caused by COVID. Growth momentum is likely to be back in Q4. We continue to see growth in our DLM business with significant order wins. Defense market spends seems to be promising and is expected to grow in this FY which gives Cyient an opportunity for growth.

Transportation

Transportation BU witnessed a de-growth of 3.5% QoQ and 15.9% YoY in Q4 FY20 driven by supply side challenges in the Q4, in addition to delay in closure of new deals. For full year Transportation BU witnessed a de-growth of 4.2% YoY. The year we extended the MSA with a key client, new client wins and initiation of a strategic DLM project in signalling space. The outlook for the year continues to be moderate and we expect growth across several key clients.

Communications

Communications BU witnessed a de-growth of 2% QoQ and growth of 1.1% YoY in Q4 FY20. The performance was better in the second half of the year compared to first half with a growth of 11% driven by generation of new revenue streams in key clients, new client additions, revenue streams from 5G rollouts and expansion into new segment. For full year Communications BU witnessed a de-growth of 8.1% YoY. For the year the industry is expected to investment in improving network, 5G technology increasing adoption of IoT and smart city solutions.

E&U 

The Energy and Utilities BU witnessed a de-growth of 20.5% QoQ and 18.3% YoY in Q4 FY20 impacted by closing of two major utilities projects and supply side challenges in Q4. For full year Energy and Utilities BU witnessed a de-growth of 0.6% YoY. The BU witnessed a flat growth YoY. The business is expected to be impacted in the near term with uncertainties over demand and supply, investment strategies and business models. We expect the business to recover in the second half of the year.

Semiconductor 

Semiconductor business witnessed de-growth of 22.3% QoQ and 35.1% YoY in Q4 FY20 predominantly driven by IC chips delivery issues due to disruptions in the supply chain. For full year SIA BU witnessed a degrowth of 14.3% YoY. We expect positive business momentum through opportunities in design services for large digital chips, embedded systems and software for automotive and new turnkey silicon opportunities.

Medical Technology and Healthcare

The Medical and Healthcare business witnessed a de-growth of 10.9% QoQ and a growth of 12.7% YoY. Revenue from key clients has grown considerably through the year. For full year MT&H BU witnessed a growth of 18.5% YoY. We also witnessed a strong growth in the manufacturing side of the business. With the focus on COVID related services we expect positive momentum to be back in the second half of the year.

Portfolio

Portfolio BU witnessed a de-growth of 3.0% QoQ and 10.6% YoY. The business was impacted by supply side challenges in Q4 predominantly in the industrial business. For full year Portfolio BU witnessed a degrowth of 9.7% YoY. Our Geospatial business grew QoQ led by a strong performance in two of our top three clients. For the year we expect the revenue to decline as clients are likely to limit their IT spends.

Operational Highlights      

CSR Activities

• Continue to support 28 Government Schools – providing education to 18,500+ under privileged children
• Continue to support 70 Cyient Digital Centers (CDCs) in around Telangana and Andhra Pradesh
• Provided training to the 3rd pilot batch of 300 unemployed women on tailoring, bakery and beauty courses through the Cyient Urban Micro Skill Center (CUMSC) for urban poor
• Organized a blood donation drive to commemorate 100 years of the Indian Red Cross Society. Witnessed participation by more than 500 volunteers
• Took up the cause of girl child welfare by organizing activities geared to help under privileged adolescent girls

Awards & Recognitions

• Won the Supplier Innovation Award for the seventh consecutive year and the Supplier Highest Productivity Award for the fourth year in a row at the Annual Pratt and Whitney Supplier Summit 2019
• Won the 2019 Harithaharam Award at the CII Telangana State Annual Meeting 2019-20 for sustainable efforts in improving tree cover in the state

About Cyient

Cyient (Estd: 1991, NSE: CYIENT) provides engineering, manufacturing, geospatial, digital, networks, and operations management solutions to global industry leaders. Cyient leverages the power of digital technology and advanced analytics capabilities, along with domain knowledge and technical expertise, to solve complex business problems.  As a Design, Build and Maintain partner, Cyient takes solution ownership across the value chain to help clients focus on their core, innovate, and stay ahead of the curve.

Relationships form the core of how Cyient works. With over 15,000 employees in 22 countries, Cyient partners with clients to operate as part of their extended team, in ways that best suit their organization's culture and requirements. Cyient's industry focus includes aerospace and defense, medical, telecommunications, rail transportation, semiconductor, utilities, industrial, energy and natural resources.

For more information, please visit www.cyient.com.
Follow news about the company at @Cyient.

Contact Details
Media Relations 

Perfect Relations
Vishal Thapa
Mobile: +91 9701834446
Email:vthapa@perfectrelations.com

Disclaimer

This document contains certain forward-looking statements on our future prospects. Although Cyient believes that expectations contained in these statements are reasonable, their nature involves a number of risks and uncertainties that may lead to different results. These forward-looking statements represent only the current expectations and beliefs, and the company provides no assurance that such expectations will prove correct.

All the references to Cyient's financial results in this update pertain to the company's consolidated operations comprising wholly-owned and Step-down subsidiaries Cyient Europe Limited; Cyient Inc.; Cyient GmbH; Cyient Australia Pty Ltd; Cyient Singapore Private Limited; Cyient KK; Cyient Israel India Limited; Cyient Insights Private Limited; Cyient Canada Inc.; Cyient Defense Services Inc.; Certon Software Inc.; Certon Instruments Inc.; B&F Design Inc.; New Technology Precision Machining Co. Inc.; Cyient Insights LLC; Cyient Benelux BV; Cyient Schweiz GmbH; Cyient SRO; AnSem NV; AnSem B.V.; Cyient AB; partly owned subsidiaries Cyient Solutions and Systems Private Limited; Cyient DLM Private Limited; joint venture Infotech HAL Ltd (HAL JV) & associate company Infotech Aerospace Services Inc. (IASI) until 8th December 2017.

The income statement and cash flow provided is in the internal MIS format. MIS format is different from the income statement published as part of the financial results, which is as per the statutory requirement.

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SOURCE Cyient