Aricoma Group, led by Milan Sameš, works for the banking sector and, for example, car manufacturers. It is the automotive industry that is now under great pressure due to falling demand, lack of chips, environmental regulations or simple competition.
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“It stops being fun because it’s about jobs and so on. Some automakers can actually cost these pressures their lives. On the other hand, if European industry manages to change this paradigm, it may mean acceleration, ”says Milan Sameš, head of the Aricoma group of companies with a turnover of over eight billion crowns.
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You have currently made a new acquisition of Komix, which provides services for e-government, insurance companies and car manufacturers such as Škoda Auto. Why did you choose it?
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It is a very strategic investment for us, for two main reasons. Certainly, viewers also noticed that Komix is a very active company in the field of e-government and has occupied space in some sectors of government.
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And these are long-term things, so we believe that the combination of what we already have in Aricoma Group and Komix will strengthen our own position in digitizing government, because we believe that digitizing the state will certainly accelerate because we’ve been there lately. or they’ve lost a bit a step over the last ten years, so I hope we catch up and we’re part of it.
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Are you betting that the state will invest in digitization and that the company will grow much faster?
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Yes. I believe that the state must invest in digitization, because when we look at some other states of the former Eastern bloc, Lithuania, Latvia, Estonia, I must say that we are lagging behind them by a considerable dose.
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How did the negotiations with Komix go? The company, I suppose, was not for sale, so you joined it and started negotiating a takeover?
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Yes, but I must say that we were not alone. It was a competitive matter, we competed with other companies. And I’m honored to say that in the end we won this little race. But it was an exception. This was not the case with the other companies we took over. Other companies have either contacted us or we have contacted them. The comic was to some extent an exception.
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Did you win the highest prize or something else?
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You would have to ask the shareholders of Komix. I hope it wasn’t just about money, it was about mutual understanding, and especially about the fact that we modestly think that our vision and what we have achieved so far is somewhat attractive. In short and well, a Czech-owned company of this scale, which clearly shows the expansion plans to the west of our borders, is simply an attractive message for an iceberg.
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How can Komix’s capabilities be used in Western markets? Given that we are very far behind in the e-government you talked about.
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That market is international. Yes, the Czech state may be behind in e-government, but it is definitely not the people who work at Komix. These are very educated people who speak English and are definitely able to be involved in projects in Western Europe, for example. That’s one thing.
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The second thing is that Komix does not only do state administration, it works for very important industrial companies, such as the Czech Škoda, and of course the space in the Volkswagen Group opens up there. As Aricoma Group, we have already done something for the Volkswagen Group. So I expect our position to be strengthened. A lot of things are changing in that car market, it’s moving towards digitization. We want to be a part of it.
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Milan Sameš (53)
– CEO of Aricoma Group
– served as Director of Oracle Czech Republic or President of Europe at Ness Technologies
– from 2018 he managed Autocont and from 2019 also the entire Aricoma Group
– graduated from the Czech Technical University in Prague, majoring in electronic computers and mathematical informatics
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I’ll ask you later. Tell me now how the valuations of IT companies, which are in high demand, are currently moving. This is usually estimated in multiples of EBITDA. So when Komix has an EBITDU of around 50 million…?
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These are, of course, multiples of EBITDA. If you were to ask how much we gave for it, I will not answer you here, unfortunately, but it is true that in the IT Services market, to narrow it down, the multiples are different.
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For example, in the range of 10 to 15 times?
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In our territory very exceptionally, rather not. This is more for the product business. In our country, it is less, but it can be anywhere from four to ten, and it really depends on what kind of company it is, whether it has a product portfolio, whether it has so-called repeatable income, or recurring revenue, and so on.
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Yes, if you look at the stock market, some such companies trade for 30 times EBITDA, but there we would already have serious doubts about the valuation, and these are companies of a different nature, in another territory, mostly in the United States and the like.
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What opportunities do you see, for example, in the automotive industry for which Komix works and you are already moving there?
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I will probably talk about automotive in general. Because when you look at it, all car manufacturers in the world have gone a lot in the direction of digitization. Whatever we think about it, it must be said that Tesla is setting the trend here. And she has an advantage because she started working as a car manufacturer, in whose DNA the digitization really is.
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While the good old honest carmakers went away from the good cars, but they didn’t have the digital DNA and they’re trying their best to catch up. It’s very complicated, because when you look at it, while Tesla is such an Apple among cars, it means that their system is completely integrated, it builds as a whole. On the contrary, in the recent past, classic cars worked in such a way that there were many modules, such as a hundred, that were competed by the purchasing department of other suppliers, and now all of a sudden they have to communicate all this together. And that’s a big challenge for standard automakers to integrate.
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Do you want to participate?
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Yes, we certainly want to participate.
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It reminds me of the situation in the banks. Many of them have obsolete IT systems, often from the 1990s or after 2000, and their systems do not communicate with each other. As a result, some banks have written off huge amounts. Aricoma also works for banks. Do you see it similarly?
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We work for banks a lot. In this case, I would stand up for the bank a little. They also have a legacy behind them, but they also have a large clientele, and I think many banks are already waking up in the digital age. After all, it has very important challengers, former start-ups like Revolut and the like, so it’s not easy. But I would say that car manufacturers have it even more complicated, because if I simplify it and say it with a smile under the veil, the banks still work with items, with numbers, in some tables, from the left, from the right.
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But cars are far more complicated, because the integration of the 100 subsystems, that is, the integration of 100 different chips, from different manufacturers, if I simplify it, and of course it is subject to safety standards, tests and so on. We’re already talking about the real mechanical world, and it’s even more complicated. Plus, it’s happening in real time. That car has to react to you in real time, while the bank, if it doesn’t respond in real time, nothing happens. If the car doesn’t respond, it will kill someone. And that’s a big difference.
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And if you should look at developments a little into the future, the next few years. On the one hand, Tesla, which is very ahead in this direction, but again in the technical part, is not much, because some owners of Tesla told me that the car has solid technical problems after a year. On the other hand, car manufacturers that have a very solid technical part, such as Volkswagen, Škoda, but the IT part is lame. Which branch do you think will win?
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That’s a question I can’t even dare answer. It’s about whether Tesla becomes a normal car before normal automakers learn to do it digitally. This is, of course, a light question, and I cannot answer it. Of course, I wish everyone to make it, so that no one can take it, because it is true that the European car industry, not through its own fault, is under enormous pressure from all sides, and that is no longer fun, because it concerns jobs and so on.
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Do you mean environmental pressures?
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Maybe. And again, I do not dare say whether it is good or bad, I just state that it is under a lot of pressure and that it will have a very big impact on European industry. Some automakers can actually cost the life of environmental or competitive pressures. Jobs can be reduced, on the other hand, if European industry can cope with this paradigm shift, it could mean acceleration. But how it turns out, whether bad or good, no one knows today.
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Aricoma Group
– the largest Czech ICT holding company founded by the KKCG investment group in 2019
– includes, for example, Autocont, Cleverlance, DataSpring, AEC, Cloud4Com, Internet Projekt and Seavus
– Aricoma Group companies cover the portfolio of services ranging from the design of ICT architecture through infrastructure and cloud services to the development of their own software solutions and outsourcing
– the group employs almost 2,800 people and its total sales last year exceeded eight billion crowns
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Some players may actually have problems, because now we have seen that the carmaker in Cologne has stopped production due to a lack of chips. How can this chip failure affect automakers?
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The current lack of chips is a far more serious problem than we can imagine. He revealed that the global chip manufacturing system is extremely fragile and dependent on very few producers. Companies that can be counted on the fingers of one hand, which are mainly in Taiwan.
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Any fluctuations in this business mean that dominoes start to fall, and here it happened that when the pandemic came, the carmakers probably stepped on the brakes, because they really use a lot of chips. He stepped on the brake, the chip industry adapted, scaled up production, and it’s so interconnected and dependent on few products that it’s hard to get it back on track.
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This means that only a few of the top manufacturers, such as mobile phones, Apple and so on, have no problems because they have the greatest firepower. But everyone else has huge problems with chips, you, if you go to order a car today, you can have a big problem with the fact that it will actually take half a year or more. But even if you want a specific cell phone or anything else that has chips, which is everything in today, the problem is, so the system swayed, it’s kind of like a chip blackout and throwing back the network can be a big problem.
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So it’s not just about carmakers, but many other industries?
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This applies to all chips. And it’s felt by manufacturers of computers, various components, and so on, so it’s really a big mess. Maybe now the spectators have noticed, it’s a little funny that she got stuck in a ship in the Suez Canal and everyone has a big head of it, because the system is already so broken that in short and well, ships with a load of even those chips can’t pass and it can deepen the problems and chain the effect again. Because if manufacturers don’t produce, they won’t sell; if they don’t, they won’t have their profits and it can be a problem.
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The whole supply chain is stuck, which is very fragile.
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By the way, it is also a political issue. Surely you have noticed that even under the former president, America went very hard with subsidies to return chip production to its territory, and the same project is currently running in Europe, so even politicians realize that this is a very serious problem.
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But will it take some time for production to start in Europe?
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It’s not a matter of months, because those investments in chip production go into the many billions of dollars and it’s almost like building nuclear power plants, it’s really for a long time.
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Are there any companies in Europe that could start making chips?
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No. We have to attract someone outside Europe here, I don’t want to name them completely, but for example Samsung or someone similar would definitely want to cooperate. But I say it is more of a political issue than anything else.
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