How has 2022 started for DOMINION?
Despite the complex context, we have started 2022 with record figures. We have had a growth of 4% in sales and 9% in our margin and, in addition, this has led to better margins on sales of around 30-50 basic points, which are very good results.
Finally, in net profit we have grown by 23% and with that we reached the highest net profit over sales that we have ever had and hence those record figures.
By business segments, how has this growth been?
We have three business segments, two in the B2B area, services and projects, and the B2C segment. The first of them have evolved very positively, they are the 90% of the company's business and both in services and projects we have grown in sales and margin. In fact, we achieved record contribution margins for services, the highest we have ever had for a first quarter, and in the case of projects we continue to maintain contribution margins above the targets set, 17.5%.
This evolution has been good in terms of numbers, but also qualitatively. Service contracts operate normally and we are winning new contracts.
In this first quarter we are launching two important contracts, two pilots in Germany in telecommunications networks, a country that is going to make a very important investment in telecommunications infrastructures. Also, in a contract with Endesa here in Spain.
As for projects, everything is going according to plan. We are noticing a very important growth and we are beginning the execution of the first renewable projects in Spain.
The behavior has been different in the B2C segment, consumption has not behaved well this first quarter, we already saw it since the end of last year and that has had an impact on our entire energy vertical because prices are high, inflation... And there we have noticed how the margins have been somehow affected. We have also noticed it in the number of customers we have in the energy vertical and, however, it has been compensated because the telecommunications vertical has grown very significantly. At the end of March we have twice as many customers as a year ago and other newer segments that we have just launched, such as high-end mobile rental, which is having very significant customer acquisitions. We will see how this segment evolves during the rest of the year.
How has DOMINION achieved these record numbers?
We are a very resilient company, which behaves very well in complex environments and with very solid foundations. Regardless of the economic context, we already have a foundation on which to build and grow.
In addition, we have a growth plan and we are positioned in trends that, regardless of the economic cycle, we do not believe will change, they are trends with a lot of growth potential. I am talking about underlying trends such as outsourcing, subcontracting, which is something that has grown and will continue to grow in the coming years, subcontracting based on added value, which is what we promote in our offer to clients, with a lot of technology incorporation and a growing demand for services that we call environmental.
We have created a unit called DOMINION Enviroment, which encompasses all those services that help our clients' sustainability and this is having a growing demand right now and then other areas such as renewables, an area of growth.
In general, we are positioned in trends that allow us to have such important growth.
How are the irregularities that we have been experiencing since the beginning of the year affecting you?
These are contexts that generate a lot of uncertainty and in which all companies have to get used to living and moving around. Specifically, what worries us most are the indirect effects that the variables or the macro behavior that we are seeing more than the direct ones may have.
By indirect I mean how inflation, the price of raw materials, supply chains... can affect our clients and their hiring and investment decisions.
How are the irregularities that we have been experiencing since the beginning of the year affecting you?
These are contexts that generate a lot of uncertainty and in which all companies have to get used to living and moving around. Specifically, what worries us most are the indirect effects that the variables or the macro behavior that we are seeing more than the direct ones may have.
By indirect I mean how inflation, the price of raw materials, supply chains... can affect our clients and their hiring and investment decisions.
Directly we have more control over these risks, although it is true that we are suffering from delays in the supply chain in some of our projects, but in terms of the effect that inflation could have on our margins, it is something that we have collected in the contracts.
How do you expect the sector to evolve?
If there is something DOMINION has, it is its diversification and that has the virtue that we can balance and mitigate the movements and impacts that different sectors can have and it is difficult for me to talk about the evolution of a single sector.
The evolution for DOMINION is positive despite the very difficult environment we have.
What challenges and forecasts do you have for the rest of the year?
DOMINION has a strategic plan that ends in less than two years, at the end of 2023, and one of the most important challenges is to maintain the levels of organic growth that we have set ourselves as a goal for this year. They are achievable because we are a resilient company, we are not cyclical, we have these solid foundations... therefore, we can achieve those ambitious goals that we set for ourselves, but it is a business challenge to maintain them.
Outside of what would be pure business, we have another challenge, the current price of DOMINION's share on the market. If we look at how the fundamentals of the company have evolved and how the listing price has evolved, we see that, since our IPO, our EBITDA has grown by 160% and our listing by 60%, with which there is a gap between price and value that I think is a challenge for the company and also a personal one from the position that I have to occupy. In addition, it poses certain difficulties when carrying out operations, for example, M&A, and the challenge will also be to find creative or innovative solutions for this M&A, to choose the projects in which to allocate capital, in which to place the important cash generation that we have as a company.
In addition to our distribution of dividends that this year will be more than 14 million and our share repurchase program that is underway.
Interview published on 2022/06/03 on Estrategias de Inversión
