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Syzygy as expected due to Daimler, Lufthansa and Porsche

  • Marketing

Syzygy AG, the internationally active German full-service agency for digital marketing, recently published its results for the first nine months of 2019. Syzygy AG's operating performance was characterised by the continued positive development of its German subsidiaries, which, however, were offset by the continued decline in business at the companies operating abroad, in particular the UK subsidiaries. The group operates as a creative, technology and media service provider for digital marketing.

time to read: 2 minutes by Mario Hose


Sales in Germany increase

Compared to the previous year, the subsidiaries operating in Germany achieved a sales increase of 6.0% from EUR 34.29 million in the previous year to a new record high of EUR 36.34 million, starting from an already higher level. On the one hand, this reflects the stronger concentration on the German market that has been achieved and, on the other hand, the sales impulses from the acquisition of new customers. In addition to Lufthansa, for which Syzygy AG acts as new lead agency, many well-known customers such as Daimler Financial Services, Deutsche Bahn and Porsche were acquired.

International subsidiaries burden the business

The positive development in Germany had not been able to compensate for the weakness in sales in the UK business, so that a slight overall decline in sales from EUR 48.06 million to EUR 47.63 million is visible across the group, corresponding to a decline of -0.9%. In line with the slight decline in revenues, EBIT fell from EUR 4.55 million to EUR 4.16 million in the first nine months of 2019. The regional differences in the development of the Syzygy subsidiaries can also be seen here.

While the EBIT contribution of the German companies reached a new record high of EUR 5.03 million after EUR 4.63 million in the previous year, the EBIT of the international companies was below the break-even point at EUR -0.26 million compared to EUR 0.94 million in the previous year. In addition to the already low sales revenues in Great Britain, this includes the restructuring expenses incurred in previous reporting periods.

In line with the expectations of GBC Research

Overall, the figures for the first three quarters of 2019 were in line with GBC Research's expectations in absolute terms. Syzygy's management has also confirmed the previous Guidance, according to which revenues should reach the previous year's level and an EBIT margin of 8 to 9% by the end of the 2019 financial year.

Increase in EBIT margin expected

The profitability level achieved in the first nine months is exactly within the expected EBIT margin range. According to GBC's experts, the restructuring measures in the UK should be largely finalised, with no further charges expected in the fourth quarter of 2019. For the coming financial year, the absence of restructuring charges should have an impact throughout the year, enabling the company to achieve further return improvements. Accordingly, GBC continue to forecast an increase in the EBIT margin to 10%.

Analysts confirm price target and rating

In line with the confirmed company forecast, the analysts of GBC maintain their estimates unchanged. Their DCF valuation model and the target price of EUR 10.80 remains unchanged and they continue to award the BUY rating.

Conflict of interest & risk note

In accordance with §34b WpHG we would like to point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH may hold shares in the aforementioned companies and that there may therefore be a conflict of interest. Further details can be found in our Conflict of Interest & Risk Disclosure.