CS Communication & Systèmes SA :SX-FR: Earnings Analysis: For the six months ended June 30, 2017 : August 5, 2017

CS Communication & Systèmes SA reports financial results for the half-year ended June 30, 2017.

We analyze the earnings along side the following peers of CS Communication & Systèmes SA – Sopra Steria Group SA (SOP-FR) that have also reported for this period.


  • Summary numbers: Revenues of EUR 89.30 million, Net Earnings of EUR 0.97 million.
  • Gross margins narrowed from 6.48% to 6.22% compared to the same period last year, operating (EBITDA) margins now 7.10% from 5.56%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2016-12-31 2016-06-30 2015-12-31 2015-06-30
Relevant Numbers (Semi-Annual)
Revenues 89.3 88.25 88.27 86.84 83.04
Revenue Growth (YOY) 1.17 1.62 6.3 8.82 0.75
Earnings 0.97 -1.86 0.57 0.53 0.44
Earnings Growth (YOY) 68.47 -449.34 30.45 772.15 -1.57
Net Margin 1.08 -2.1 0.65 0.61 0.53
EPS 0.05 -0.11 0.03 0.03 0.02
Return on Equity 2.61 -5.59 1.72 1.61 1.38
Return on Assets 0.88 -1.74 0.57 0.55 0.44

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Market Share Versus Profits

Revenues History
Earnings History

SX-FR‘s change in revenue this period compared to the same period last year of 1.17% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that SX-FR is holding onto its market share. Also, for comparison purposes, revenues changed by 1.19% and earnings by 152.13% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s gross margins showed no year-on-year improvement. In spite of this, the company’s earnings rose, influenced primarily by the improvement in operating margins (EBITDA margins) from 5.56% to 7.10%. For comparison, gross margins were 9.51% and EBITDA margins were 6.54% in the last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

SX-FR‘s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently -79.31 days, compared to last year’s level of -106.45 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 4.47% to 5.34% and (2) one-time items. The company’s pretax margins are now 2.42% compared to 1.82% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

CS Communication & Systèmes SA engages in the design, integration, and operation of critical communication and information systems. It operates through the following segments; Defense, Homeland Security, Space, Aeronautics, Energy & Industry, and Transportation. The Homeland Security segment engages in security and protection for infrastructures and sensitive sites. The Space segment engage in space applications and sytems. The Aeronautics segment designs and develops embedded real-time critical software and supports clients throughout the life cycle of the systems from digital design to maintenance, while responding to competitiveness and cost optimization requirements. The Energie & Industries segment provides industries performance and risk management services. The Transportation segment provides passenger information, operational support, mobility, secure systems. It also include nuclear risk management, and industrial computing. The company was founded on December 13, 1968 and is headquartered in Le Plessis Robinson, France.

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