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14 February 2013
Transcom Fourth Quarter and Full-Year 2012 Results Presentation
Johan Eriksson, President & CEO
Outstanding
Customer
Experience
Transcom at a glance
1
3
• A global customer experience
specialist...
• ...providing outsourced
customer care, sales,
technical support, and credit
management...
• ...through an extensive
network of contact centers
and work-at-home agents Transcom’s business is to
help make sure that our
clients’ customers form
positive perceptions of their
interactions with them.
”
What is Transcom?
Transcom in numbers
• 30,000 people
• 70 contact centers, onshore, off-shore and near shore
• 28 countries
• Delivering services in 33 languages...
• ...to over 400 clients in various industry verticals
• €605.6 million revenue in 2012
• Market cap: SEK 896.8 million as at February 11, 2013. Listed on NASDAQ OMX Stockholm
(TWW SDB B and TWW SDB A)
4
We have an extensive global footprint
Home markets
Austria
France
Netherlands
Slovakia
UK
Belgium
Germany
Norway
Spain
Australia
Near Shore Locations Offshore Locations
Chile*
Peru*
Philippines*
Tunisia
5
Czech Republic
USA
Canada
Italy
Poland
Sweden
Denmark
Portugal
Switzerland
Croatia
* Developing into home/near shore markets
Canada
Croatia
Estonia
Latvia
Czech Republic
Hungary
Lithuania
Transcom’s organization
6
• Corporate management
- CEO, CFO, CIO, Head of Operations, Head of Global
Sales & Accounts
• Regional management
- North region (28% of revenue)
- Iberia (19% of revenue)
- North America & Asia Pacific (20% of revenue)
- South (15% of revenue)
- Central Europe (10% of revenue)
- Credit Management Services (CMS) in eight European
countries (8% of revenue)
Transcom’s service portfolio
7
• Customer service
Customer experience specialists trained to support
best-in-class product, service and brand experiences
for our clients’ customers
• Technical support
Tiered support models, from the simplest questions to
more complex support scenarios
• Customer retention
Preventing defection and maximizing the lifetime of a customer
• Customer acquisition
Acquiring new customers cost-efficiently, and building
strong customer relationships as a basis for future interactions
• Cross- and upselling
Building relationships and identifying customer needs
during any type of interaction, and taking appropriate
action to satisfy the customer’s need
• Credit management services (CMS)
Early collections, Contingent collections and Legal collections
Recap of our situation and focus areas
8
Situation today and short-term focus
• Transcom’s profitability has decreased
in recent years, but is now improving
• Continuous focus on underperforming
areas
• Growth in selected areas and efficiency
improvements
• Broadening client base
Market trends
• Growth driven by domestic Asia Pacific
and Latin America markets
• Diversification (geography and
business models)
Going forward - Strategic direction
• Creation of outstanding customer
experiences, while helping clients to
reduce cost and drive growth
• Flexibility is critical
Our performance in Q4 2012 and FY 2012
2
Revenue in Q4 2012 increased 14.1% compared to Q4 2011
37.9 45.4
25.8 31.9
28.5
31.0 21.4
25.2 14.3
16.0 14.9
13.5
Q4 2011 Q4 2012 10
Central Europe
South
Iberia
North America
& Asia Pacific
North
Growth
+19.7%
CMS
Net revenue, Q412 vs. Q411
€m
+23.8%
+8.6%
+17.5%
+11.5%
-9.0%
162.9
142.8
• Increasing volumes with our installed base clients
• New clients contributed meaningfully to growth, not least in North America & Asia Pacific
Revenue in 2012 was 9.3% higher than in 2011
140.5 162.4
98.3 112.1
108.9
119.4
92.6
98.5 55.6
57.8 58.1
55.3
2011 2012 11
Central Europe
South
Iberia
North America
& Asia Pacific
North
CMS
Net revenue, 2012 vs. 2011
€m • Growth in all regions
• CMS revenue decreased
• Some of our offshore locations evolving into home markets as well
- Grow in new attractive markets
- Diversifying our client base
- Increasing seat capacity utilization
605.6
554.1
Growth
+15.6%
+14.0%
+9.6%
+6.4%
+4.0%
-4.8%
Underlying EBITA in Q4 2012 improved compared to Q4 2011
12
* Underlying performance, excluding restructuring and other non-recurring costs
** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
Restructuring
savings
Volume &
efficiency-
driven
gains
Expansion
investments Sales &
support
Non-
recurring
costs
related to
France EBITA
Q412*
EBITA
Q412** EBITA
Q411
Reassess-
ment of
accrued
revenue in
CMS
2.2
+3.0
+1.3 -4.4
-0.1 +0.8 2.9
3.3 +0.4
Underlying EBITA in 2012 improved compared to 2011
13
* Underlying performance, excluding restructuring and other non-recurring costs
** Underlying performance, excluding restructuring and other non-recurring costs, and a reassessment of
accrued revenue in the CMS business unit
Restructuring
savings
Volume &
efficiency-
driven
gains Expansion
investments Sales &
support
Reclass-
ification of
amorti-
zation
EBITA
2012*
EBITA
2012** EBITA
2011
Reassess-
ment of
accrued
revenue in
CMS
Non-
recurring
costs
related to
France
6.8
+7.6
+3.5 -7.4
-0.7 +1.2 +1.7 12.8 +0.4 13.2
EBITA margin improvements in North America & APAC, Central Europe and South, offset by lower margins in North and CMS
14 * Underlying performance, excluding restructuring and other non-recurring costs
2012
Oct-Dec
2011
Oct-Dec
EBITA margin*
North
Central Europe
South
Iberia
North America & AP
CMS
TOTAL
3.1%
4.0%
-2.4%
4.4%
-0.6%
2.0%
1.8%
10.5%
-8.8%
-14.0%
4.9%
-1.6%
9.9%
1.5%
FY 2012 FY 2011
EBITA margin*
North
Central Europe
South
Iberia
North America & AP
CMS
TOTAL
3.1%
0.2%
-2.5%
4.5%
0.6%
7.2%
2.1%
5.9%
-0.1%
-8.8%
4.7%
-3.5%
8.7%
1.2%
• Volume and efficiency-driven performance improvements
in North America & Asia Pacific, Central Europe and
South
• North: operational performance issues on some client
projects and ramp-up costs for a new clients. Action
expected to yield results in Q1 2013.
• CMS: Decrease in volumes handled and increased price
pressure. Performance in the UK has improved, and we
expect a full turnaround during 2013.
• Volume and efficiency-driven performance improvements
in North America & Asia Pacific, Central Europe and
South
• North: lower operational efficiency on some client
projects, higher attrition and higher training costs.
• CMS: Decrease in volumes handled impacted results.
Cost reduction initiatives lowered SG&A by €2.1m.
We need to successfully address a number of short- and medium-term operational and financial challenges
15
Stop the losses in France (€1m/month in 2012). Transcom plans to stop financing
the French subsidiary’s loss-making operations beyond March 1, 2013
Increase onshore seat utilization in North America
Successfully resolve tax claims
Germany – renegotiate labor agreements
Return UK CMS to profitability
Successfully implement action plan to improve operational performance in the North region
What will it take for Transcom to return to historical margins?
16
Key performance driver
Trend vs. 2011 Q4 2012 vs. Q4 2011
Average Seat Utilization ratio
(87% vs. 78%)
Share of revenue generated offshore
(20% vs. 16%)
Average Efficiency ratio (billable over
worked hours)
n/a (positive development)
Monthly attrition n/a (positive development)
Improvements on four KPIs vs. previous year
Continue improving key performance indicators
• Seat utilization
• Efficiency
• Offshore/onshore split
• Attrition
126.8
111.2
65.3 65.0 71.0
75.9 80.7
89.1
73.4
13.2 11.9 17.2
32.1 38.1
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Q211 Q311 Q411 Q112 Q212 Q312 Q412
Gross debt (€ m) Net debt (€ m) Net debt/EBITDA
• Gross debt increased by €4.8m vs. Q312
• Net Debt increased by €6.0m compared to the Q312 level
• Net Debt/EBITDA ratio: 1.97 (1.71 in Q312)
• Interest charge €0.7m (€0.8m in Q312)
Debt & leveraging
3
Going forward – Transcom’s strategic direction
19
Transcom’s brand promise
Outstanding Customer
Experience, driving
revenue and brand
loyalty
”
North America and Asia Pacific • Continue expanding in local markets in Asia Pacific
Latin America • Serving domestic markets and the US,
in addition to Spanish clients
North Europe
Central Europe • Near shore
Growth opportunities
21
Short-term focus
• Continuous focus on executing turnaround in underperforming areas
• Continued focus on revenue expansion and efficiency improvements
• Increased focus on quality and service delivery to support significant ramp-up of new volumes
Medium-to long-term priorities
• Grow revenue in line with overall market growth in the markets where we choose to compete
• Improve profitability and decrease earnings volatility
- Continuously strengthen operational efficiency
- Optimizing our geographic delivery mix
- Focus on broadening our client base
Summary: key priorities going forward
Thank you! Questions?
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