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Whilst the challenging market conditions seen in Q1 (Sopra Steria contracts 4.7% in challenging first quarter) have not abated, Sopra Steria does appear to be making progress with the European IT services giant delivering a credible H1 2025 performance, despite the conditions, with revenue declining 3.6% (-3.8% organic) to €2.84bn.
Crucially, the firm is showing clear signs of sequential improvement. The company's organic revenue contraction of 3.8% masked a notable recovery, with Q2's -2.7% decline representing a significant improvement from Q1's -4.9% drop, suggesting the worst may be behind the French-headquartered firm as client sentiment slowly improves.
Geographically, the picture was mixed. The largest market, France, representing 42% of group revenue, saw an improvement in Q2 (-2.4%) compared to Q1 (-4.9%), with a return to more 'normal conditions' in public sector and in defence following a very slow start to the year. The UK (16% of revenue) faced tougher headwinds with -7.7% organic decline, though major contract extensions through 2027-2028 provide visibility going forward. Continental Europe struggled with -3.1% contraction, while the Solutions unit bucked the trend with 2.6% growth.
Overall margins are holding up, with operating margins down slightly to 9.2% from 9.7% year-on-year, demonstrating good cost management. Net profit increased 15.3% to €142m, aided by some favourable comparisons and improved efficiency. Strategically Management's focus on defence, cybersecurity, and European digital sovereignty appears a good place to be given current geopolitical tensions. The Aurexia acquisition also strengthens the firm's financial services consulting capabilities, while emphasis on GenAI should help position the company for growth opportunities.
The forward outlook looks cautiously optimistic. With full-year targets confirmed (organic growth -2.5% to +0.5%, operating margin 9.3%-9.8%), Sopra Steria appears positioned for a return to growth. Sequential improvements and strong client relationships in the right sectors should all help as long as market conditions improve.
Posted by: Marc Hardwick at 09:07
Tags:
IT+services