Frequentis’ Order Books Are Full

May 28, 2024

In the fiscal year 2023, Frequentis saw significant increases in both revenue and order intake. This has provided the Vienna-based company with a strong foundation for high capacity utilization in the current year. The developer of voice and data communication systems for air traffic controllers, airports, emergency services, railways, and maritime traffic increased its consolidated revenue by around eleven percent to 427.5 million euros.

Geographically, Frequentis is growing in all regions. About two-thirds of the revenue came from European markets. Another 16 percent was generated in North and South America, 11 percent in Asia, and 7 percent in Australia, the Pacific, and Africa. In Asia, CEO Norbert Haslacher expects particularly strong growth in the coming years due to the numerous new airport constructions.

The order intake figures underpin that growth has continued to accelerate. The company achieved a new record of 504.8 million euros in order intake, a substantial increase of 24.7 percent compared to the previous year. “We are exclusively talking about firm orders here, which will generate revenue, without framework agreements,” emphasizes CEO Norbert Haslacher. Approximately 345 million euros of this came from the air traffic management segment, which accounts for 69 percent of total revenue.

The order backlog improved by 13.9 percent to 594.7 million euros. Of this, 300 million euros, or about half, are expected to be booked as revenue in 2024. One of the largest contracts Frequentis secured was from the USA, with a total volume in the three-digit million range. In cooperation with the telecom company Verizon, Frequentis will upgrade all safety-critical areas in US airspace to an IP-based network for the Federal Aviation Administration (FAA) in the coming years. In Norway, Frequentis was awarded the contract for nationwide control room communication for emergency services and medical on-call services. Another highlight was the contract from the French railway network, which includes equipping 40,000 mobile workstations with communication networks.

The downside of the numerous new projects is the initial costs. “Especially with the large, multi-year projects we won last year from US and Canadian air traffic control, there are corresponding initial costs at the start of the project. Profitability increases during the rollout, i.e., during implementation and maintenance,” explains CEO Haslacher. In 2023, the EBIT margin slightly shrank to 6.2 percent. Frequentis also calculates an EBIT margin of six percent for the current fiscal year. In absolute terms, operating profit improved by around seven percent to 26.6 million euros in 2023. Consolidated profit rose from 18.9 to 20 million euros.

The public safety segment significantly increased its profitability. “We booked several software-centric projects here that generated good margins through the licensing component,” notes Haslacher as the main reason. The slight increase in revenue was due to the postponement of orders, “and these will now generate revenue in 2024.”

In its annual forecast for 2024, Frequentis expects continued growth in revenue and order intake. However, the initial costs for new projects and acquisitions, such as the Norwegian company GuardREC, acquired in the summer of 2023, will curb margin growth. Therefore, Frequentis will primarily generate market-driving news with new orders and product launches.

Technologically, the company is top-notch in safety-critical communication fields, especially in digital voice and data communication systems for the rapidly growing global drone traffic or remote and digitally controlled airport towers. The digital equipping of authorities and the construction of new airports form the basis for Frequentis to win more and more public tenders.

Another strength of the company is its rock-solid consolidated balance sheet. The equity ratio stands at 41.9 percent, and the net cash position amounted to 84.3 million euros at the end of 2023. Frequentis plans to slightly increase its dividend. At the Annual General Meeting on June 6, the company proposes to distribute 0.24 euros per share. It was 0.22 euros per share for the 2022 fiscal year.

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