Wavestone revenues up by 8 percent but Covid-19 starts to bite

International management and digital consultancy Wavestone has recorded annual revenues of around $450 million, but suffered a recent business slowdown of up to 20 percent.

Wavestone, a European-origin management and digital consultancy which has a regional base in Hong Kong, has achieved 8 percent growth in annual revenues to €422 million – or around $450 million. Yet, with the consulting firm having the bulk of its offices in many of the countries most impacted by the coronavirus pandemic, including France, the UK, Belgium and US, it has experienced a notable decline in business activity since the middle of March.

As the COVID-19 outbreak began to accelerate across the world, one early analysis on its impact to the global consulting industry suggested potential losses of up to $30 billion, or a near one fifth contraction this year. Yet, while the impact was expected to be far less severe in the Asia Pacific – estimated at a loss of around 12 percent – the European market was forecast to take the hardest hit, down a possible ~$13 billion or 28 percent.

For Wavestone, which serves a multitude of industries including, again, some of those most impacted by the pandemic such as retail, manufacturing, and transportation and travel, the firm estimates the slowdown in business activities since April to be in the range of 15 to 20 percent – with this month’s figures expected to be comparable to April. The firm has instituted short-time working and vacation leave to partially mitigate the cost of under-activity.

As to the broader long-term picture, in a financial statement Wavestone further noted that beyond the short-term impact of the public health crisis it’s currently “preparing to face a severely degraded situation in the coming months. As a result of the uncertain economic context and the cost-cutting measures taken by many companies, the firm is expecting a marked decline in demand, renewed pressure on prices, and stiffening competition.”

The first point the firm makes is that can rely on a strong financial position to weather the storm, with cash and equivalent reserves of about €65 million and a net financial debt at around €30 million. Still, to lower its break-even point, Wavestone has initiated a comprehensive overheads review with the aim of generating up to €15 million in savings over the coming fiscal year. The Management and Supervisory Board will also propose no dividend payment for 2019/20.

Wavestone has also frozen new hires since the middle of March (although will honour all previously signed contracts and has chosen not to interrupt ongoing trial periods), but under what it describes as its dynamic recruitment policy brought in 900 new faces over its past fiscal year. Having also reduced its attrition rate down to 14 percent compared to 18 percent the year prior, the firm’s overall headcount has risen from roughly 3,100 to 3,500 employees.

Wavestone further states that it has “vigorously revitalised” its business development activity since the onset of the pandemic by strengthening development teams and mobilising additional presales consultants. It has also channeled its efforts toward “manifestly resilient” sectors such as pharmaceuticals, utilities, and financial services, while focusing on its cybersecurity, IT optimisation and operational efficiency service lines in line with the challenges of the current landscape.

See Consultancy.eu for further coverage on Wavestone’s acquisition history and current utilisation rates.