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BUSINESS OVERVIEW
3.1
BUSINESS OVERVIEW
3.1.1
ASSYSTEM’S MARKET AND BUSINESS
SEGMENTS
3.1.1.1
Market trends
Assystem operates in the engineering market. The role of engineering is
to study, design and manufacture all or part of an industrial component
or civil engineering structure.
Assystem teams assist major industrial companies to reduce their
projects’ costs and deadlines, optimise their manufacturing, development
and commercialisation processes, and make it possible to design and
produce innovations right around the world.
According to a Xerfi study
(1)
, in France the revenues of companies
specialising in engineering and technical design rose once more in
2015 (+2.7%). Technological advancement and regulatory changes
continued to create substantial needs for specialised engineering in
industry and services. In particular there was strong demand from
automotive manufacturers and OEMs in the areas of reduction of
greenhouse gas emissions and connected cars. However, activity was
sluggish in the aeronautics sector, where development of new aircraft
such as the A400M, A350 and A320neo is reaching completion. The
main engineering firms in the construction industry experienced a slower
increase in business in 2015 (+0.5% for the panel), mainly driven by
the signature of project management contracts abroad.
The major groups fared better than VSEs. Since they are approved
engineering suppliers, they enjoy special relations with key account
customers, guaranteeing recurring revenue. In addition, their diversified
positioning on several markets and international presence meant they
were able to avoid a sudden slump in business activity. The leading
companies have therefore accelerated their development abroad,
attracted by the dynamism of German and American industry and the
growth potential of countries in the Middle East and Asia.
Competition within the profession is sure to intensify. Operators will have
to deal with the mounting strength of increasingly diverse players. This
situation results in targeted acquisitions aiming to become stronger on
markets with high potential, combined with intensive partnership and
external growth operations abroad.
In Europe, the average business operating margin for the 300 largest
companies improved somewhat from 4.5% to 4.7% between 2013
and 2014
(2)
. The revenue per employee has also increased, up
from €118,000 in 2013 to €122,000 in 2014. According to the
latest studies published by the European Federation of Engineering
Consultancy Associations (EFCA), the different member countries are
conveying a feeling that the sector is “on the road to recovery”. Greece
is the only country where the situation has deteriorated. Most member
countries are expecting to see order books filling up for the next six
months, and to once more enjoy stronger profit growth in 2016. The
year was marked by continued consolidation, with the purchase of
Grontmij by Sweco in Europe, propelling the Group into 6
th
place in
the ranking of European engineering firms.
ASSYSTEM’S POSITIONING
Assystem began as Atem, founded in 1966 by engineers of the French
nuclear programme. This business accounted for the majority of its
revenue up until the end of the twentieth century. Atem then merged
with Alphatem, jointly-owned by Dominique Louis and Cogema, to
create Assystem which went public in 1995. Shortly after its stock
market flotation the Company then diversified, with the acquisition of an
engineering firm specialising in aeronautics and automotive in 1996,
which launched the outsourced R&D business. This business drove the
Group’s growth as from the year 2000, especially following its merger
with Brime Technologies. A series of international acquisitions followed,
positioning Assystem among the top 15 European engineering groups
in 2015
(2)
, and as the 2
nd
largest independent nuclear engineering
group worldwide
(3)
.
Assystem teams operate in two major lines of business: outsourced
R&D, operated by the Global Product Solutions, division and complex
infrastructure engineering, operated by the Energy & Infrastructure
division. The Group is a major player in the nuclear, automotive and
aeronautics engineering markets where it is highly reputed for its
specialist know-how.
On the outsourced R&D market, Assystem focuses exclusively on services
for industrial customers. To a great extent these customers are European
champions among the leaders in the worldwide market, for whom
the Group provides services throughout a product’s life cycle – from
functional analysis to commissioning, including design, industrialisation
and supply chain management. Its main competitors in this fragmented
market are French companies such as Altran and Alten, as well as
Akka, Sogeti and Segula.
Supplier panel restrictions that have been applied at global level for the
past several years by major purchasers are still in force and have led
to a gradual general trend towards fixed-price services that is favoured
by large companies such as Assystem. Today, roughly 60% of Assystem
(1) Source: Xerfi France, Services d’ingénierie, d’étude et de conseil technique Analyse du marché – January 2015.
(2) Source: Ranking of the top 300 groups in architecture and engineering consulting by The Consulting Engineering and Architectural Groups – A Swedish and
International survey, December 2015.
(3) Source: The Top 150 Global Design Firms – Engineering News Record, 2016.
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ASSYSTEM
FINANCIAL REPORT
2015