For the full year ended December 31, net income rose 11.3% to 15.8m euros ($18.7m) from 14.3m euros ($16.9m) in 2004. Analysts had expected net profit of 12m euros ($14.2m). Sales, as revealed a week ago, rose 3% to 1.17bn euros ($1.39bn) from 1.13bn euros ($1.35bn) in 2004.
2005 was a year of great transformation for Bull, amply demonstrating the Group’s ability to deliver against its commitments and win the confidence of prestigious customers the world over, said Bull. With its combination of a clear strategic vision and its particular areas of expertise – within the Horizon 2008 strategic plan – I am convinced that Bull will be both an important player and a focal point for information technology in Europe.
The company had net cash of 232m euros ($275m) at year-end. Looking forward, Bull outlined a three-year strategic plan, known as Horizon 2008, which it hopes will return the company to annual sales of almost 2bn euros ($2.37bn) by 2008. Bull is actually targeting revenue of between 1.7bn euros ($2.02bn) and 1.9bn euros ($2.25bn), including external growth. Excluding acquisitions, revenue would range between 1.3bn euros ($1.54bn) and 1.4bn euros ($1.66bn), representing annual underlying growth of between 4% and 6%.
According to Bull, the key aspects of Horizon 2008 is to accelerate the growth of its services business to become the major source of the company’s revenues, to enhance operational efficiency in the business, and to reshape the profile of the company as a result, although no further details of this were given.
This is not the first time that Bull is staking its future on IT services. Four years ago it sold its services business outside of France (Integris) to the French services outfit Steria SA. It remains to be seen how successful it will be in its transformation.
However, 2005 has proved to be something of a pivotal year in Bull’s checkered history, with a new management team coming on board and undertaking a much needed reorganization. In December 2005 it countered the low value of its shares by undertaking a reverse stock split, under which every 10 of its old shares were exchanged for new ones. Prior to that, in September last year, NEC Corp offloaded the majority of its shares in Bull, reducing its stake from 10.1% to 3%. January 2005 also saw the French government finalize its total withdrawal from any ownership of the company, under highly controversial circumstances.
There is little doubt that the only reason Bull is still in existence is down to the numerous financial aid packages it had received from the French state over the past 20 years. Two years ago Bull seemed to be on its last legs when it received a 517m euros ($669m) restructuring aid package from the government in July 2004 in what was promised to be the last ever state aid for the company.
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However, that restructuring aid package simply allowed Bull to repay a previous shareholder advance of the same amount back in 2001 and 2002. Prior to that, the French hardware maker received many bail-outs from the government over the years.
Yet Bull believes its future looks bright. It cited recent contract wins, including winning the biggest systems integration contract in its history – in partnership with Lockheed Martin – to deliver the address-recognition system designed to optimize automated mail sorting for the French Post Office. The company also deployed a supercomputer, Tera-10, which will be used to host the simulations for France’s nuclear weapons tests. A cynic however might point out that both contracts involved some elements of the French state.
It was also awarded a project to deploy a system for controlling and authenticating biometric passports from the Brazilian federal police force, while the Belgian Justice Ministry awarded Bull a seven-year contract to upgrade its IT equipment.
For the 2006 financial year, Bull envisages a growth in revenue of between 4% and 4.5%, and EBIT of between 40m euros ($47.5m) and 45m euros ($53m).
