Punishing local market conditions continue to take their toll on the UK arm of Paris-based SI, Sopra Group, with revenues in the quarter to 31st March down another 3% yoy (like for like) at €21m. Headline growth was 21% including last year's acquisitions (see Sopra UK goes shopping (again) to double size).
At the group level, Q1 revenues rose by 2.4% like-for-like (11.6% headline) to €321m, mainly driven by similar growth in France, which represents 65% of the total. However, management warned that pricing pressure and new project ramp will likely impact margins (Sopra – like French peers – does not report profit on 'odd' quarters).
Sopra UK has been in organic revenue decline for each of the last four quarters, suggesting that competition is relentlessly eroding its increasingly fragile customer base. It has some useful partnering arrangements with larger French and UK players but this of itself is not enough to stoke the boilers. Sopra has some loyal marquee clients in the UK and does a good job for them. But you have to ask, given its scale (or rather lack thereof), whether it's not time for management to carefully consider whether there truly is a meaningful future for its UK services operations.