CEO's Review
Business Report January–March 2024
In the first quarter, Loihde’s revenue increased 6% year-on-year and came to EUR 33 million. Profitability improved clearly in comparison to the weak comparative period, with adjusted EBITDA totalling EUR 1.6 (-0.1) million, or 4.9% of revenue.
In line with the updated strategy, Loihde is organised into the following four business areas since the beginning of the year:
- Security Solutions, which provides security technology and locking services
- Cyber, Cloud & Connect
- Data & AI
- Digital Services
Based on the first months of experience, the business division centring around customer needs seems to function well. We are able to focus our services sharply on the customers’ needs, and we gain greater cost-efficiency now that we have centralised all support services.
Good Growth in Continuous Services
In the first quarter, Security Solutions and Cyber, Cloud & Connect grew noticeably year-on-year. Particularly pleasing was the growth in continuous services in both business areas. In Security Solutions, we won several tenders during the beginning of the year, including wellbeing services counties and other public sector organisations. Of the continuous services in Security Solutions, e.g. video surveillance and access control have continued to grow, with an increasing number of customers opting for full service agreements instead of traditional equipment investments.
Identity and Access Management (IAM) consulting, cloud transformation consulting and the 24/7 Cyber Security Operations Centre CSOC and Network Operations Centre NOC also showed good growth once again.
As far as corporate networks are concerned, we won several network modernisation projects, typically involving software-defined SD-WAN networks and connections, which we deliver operator-independently. Our ability to deliver both corporate networks and cyber surveillance 24/7 as managed services gives our customers the capacity to respond faster and more effectively to incidents.
Challenging Market Situation in IT Consulting
In Digital Services and Data & AI, billing rates remained low and weakened the company’s profitability. In both business areas, revenue clearly decreased year-on-year. In order to bring our cost levels in line with the current market demand, we have continued to implement efficiency measures.
We have also had some important wins in the early part of the year, such as the wellbeing services county of Päijät-Häme selecting Loihde as their key ICT service provider in eight different areas and Loihde signing a digital service development agreement with an international healthcare company. In the financial sector, which is important to us, we have continued to work closely with our customers and we see good growth opportunities in this segment.
Profitability Is Improving
Overall, the year has started as planned. EBITDA significantly improved year-on-year, and we experienced good growth in continuous services. The market situation in digital development has continued to be challenging as expected. The market environment is partly uncertain and hence our growth expectations are cautious. However, we are confident about our prospects for improving profitability.