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While the theme in AVEVA Group’s interim update (covering the period 1 April to date) is mostly one of ‘no change’, it is changing the way it operates in China in order to “better position ourselves for the significant opportunities in China.”
Moves include strengthening the management team and restructuring to create a wholly owned subsidiary. With no numbers provided, its not clear whether the actions are being taken because despite growth in the area, AVEVA has not been performing as well as it wanted in the region or because the company has identified a wealth of opportunities and views the restructuring as the best way to tap into them. We are inclined to think it is a bit of both given AVEVA’s statement that it expects revenue to be more heavily weighted to the second half of the year in this region, and because the BRIC countries and the Asia Pacific region performed better than North American and central Europe in the year ending 31 March (see Oil and gas powering AVEVA). However, the company highlights Brazil and Russia – not China - as countries where it is making good progress.
Oil and gas continue to fuel the company’s growth and it reports increases in order backlog and a stronger pipeline. Progress within Power is “steady”, the marine sector is still “robust” and the emphasis is on naval and offshore oil and gas projects.
AVEVA is undergoing a period of change as it transitions from its traditional role as a CAD/CAM provider to more of an engineering document management vendor (see AVEVA – rather more than CAD/CAM), manages acquisitions and subsequent restructuring operations, and handles the change in its geographic business (growth rates in emerging markets are outstripping mature markets like Europe and North America). With all that happening, the “no change” status must be seen as respectable.
