As presaged in January (see Emerging oil and gas markets keep Aveva on track) Engineering software provider AVEVA is powering ahead thanks to a strong performance from oil and gas sector, which now accounts for 45% of AVEVA’s revenue. Unsurprisingly demand is strong from the emerging BRIC countries, and notably the Asia Pacific region, which grew organically by 31% to £66.3m in the year to 31 March. This was despite the recent tragic events in Japan, which have so far not impacted the business, and while clients were also moving their contracting models away from licence based to rental pricing models. More mature markets like North America and central Europe were less buoyant. Nonetheless EMEA overall, was ‘mixed’ with revenue up 8% to £76.9m, due to ‘good growth’ in Russia, Eastern Europe and the UK oil and gas sectors. Healthy demand in the UK oil and gas sector echoes similar messages coming from HP executives, who we have just spoken to.
Group wide, revenue grew organically by 14% to £168.4m, and up 17% to a record £174m including its recent acquisitions in Scandinavia of Logimatic’s MARS shipping software, and ADB’s oil and gas software Workmate, for which it paid a combined £14.9m. Group pre-tax profits were essentially flat at £49.8m (resulting in a dip in the margin to 29% vs. 33% in FY10), due to an increase in R&D costs, which grew to 34% to £28.1m.
Following the acquisitions, AVEVA reorganised its operating units, so that it now has AVEVA NET, and the two products inherited from the acquisitions - Workmate and MARS - under a new Enterprise Solutions division, which it launched on 1 April under the leadership of COO Derek Middlemas. AVEVA’s design specific solutions are now part of the Engineering Design Systems (EDS) organisation. With the launch of enterprise solutions, AVEVA clearly sees an opportunity to broaden its reach through reseller relationships with third party services providers. It already has an agreement with Logica to offer the enterprise solutions products as a managed service. Logica has in fact been closely involved in the development of AVEVA Net since June 2010, and it is interested in using the technology to exploit opportunities for knowledge management purposes in areas such as case files and education records.
AVEVA certainly seems to be in a sweet spot right now with its focus on engineering, design and oil and gas and power, where demands just keeps rising. But given the global political and macroeconomic uncertainties it is remaining cautiously optimistic about the current year.