Alain de Rouvray, Chairman and Chief Executive Officer of ESI Group, commented: “The performance delivered in 2016, both in terms of growth and profitability, again confirms the relevance of ESI Group’s business model and strategic positioning. The significant increase in profitability was achieved without compromise on the R&D investment which lies at the heart of the Group’s competitiveness and sustainability objectives.
The growing possibilities offered by the Internet of Things and Big Data now enable a product’s lifecycle to be monitored after commissioning. They create new perspectives of “hybrid” virtual modeling that make it possible to update Virtual Prototypes with data measured in service and in real-time and enhanced by artificial intelligence. This transformative approach, entitled “PPL” (Product Performance Lifecycle) and incorporating its disruptive “Hybrid Virtual Twin” solution, provides complete control over a product entire lifecycle and offers an essential answer to the key economic challenges of the industry of the future." data-reactid="14">The growing possibilities offered by the Internet of Things and Big Data now enable a product’s lifecycle to be monitored after commissioning. They create new perspectives of “hybrid” virtual modeling that make it possible to update Virtual Prototypes with data measured in service and in real-time and enhanced by artificial intelligence. This transformative approach, entitled “PPL” (Product Performance Lifecycle) and incorporating its disruptive “Hybrid Virtual Twin” solution, provides complete control over a product entire lifecycle and offers an essential answer to the key economic challenges of the industry of the future.
2016 was marked by the success of our historical solutions and the development of the newly acquired technological bricks that underpin the deployment of the innovative solutions of our PPL strategy. 2017 will be a year of integration and transformation, on the one hand to continue our investments and to amplify our virtual and hybrid prototyping solutions, and on the other hand to adapt our commercial and marketing resources to the new business momentum." data-reactid="15">2016 was marked by the success of our historical solutions and the development of the newly acquired technological bricks that underpin the deployment of the innovative solutions of our PPL strategy. 2017 will be a year of integration and transformation, on the one hand to continue our investments and to amplify our virtual and hybrid prototyping solutions, and on the other hand to adapt our commercial and marketing resources to the new business momentum.
We remain confident in our capacity to amplify our own transformation, already widely committed to the industry of the future. This should put the Group in an ideal position to tap into the potential growth from the diversification and democratization of Virtual Prototyping and its extension toward the in-service performance, while continuing to improve our profitability”." data-reactid="16">We remain confident in our capacity to amplify our own transformation, already widely committed to the industry of the future. This should put the Group in an ideal position to tap into the potential growth from the diversification and democratization of Virtual Prototyping and its extension toward the in-service performance, while continuing to improve our profitability”.
Solid sales momentum
As announced on March 14, full-year sales totaled €140.6 million, up 12.7% year on year. Acquisition-related revenue amounted to €6.4 million, reflecting the successful implementation of initial commercial synergies. There was a positive forex impact over the year of €2.1 million, mainly reflecting the appreciation of the Japanese yen.
The product mix reflects the strong performance in Services, which contributed 23% of total sales, compared with 22% last year.
Sales generated by Licensing activity climbed 11.6% year on year to €108.3 million, driven by 13.0% growth in the installed base where repeat business (measured on a like-for-like basis and at constant exchange rates) remained at a very high rate of 89.1%.
Services revenues rose 16.5% to €32.2 million on the back of continued growth in engineering studies (+16.8%) – ESI Group’s core business – and remarkable growth in special projects (+57.1%), mainly co-creation projects using newly-acquired and emerging technologies.
ESI’s geographic sales mix reflects strong business in Asia and the BRIC countries, especially in China and India.
Improvement in gross margin
Gross margin rose from 72.5% of sales in 2015 to 73.3% this year. This good performance is a result of the improvement of the margins in Services combined with maintaining the Licenses margins at a high level. This improvement was driven by the dynamic growth of the high value-added engineering studies delivered by ESI Group to industrial firms wishing to make the transition to smart factories.
