ASBIS in Q3 2009: Consistent Achievement of Strategy During a Time of Crisis Brings Major Improvement in Results Over Prior Quarters
Press-release
ASBISc Enterprises Plc, a leading distributor of IT products in emerging markets of Europe, the Middle East and Africa, posted revenues of USD 289 million during the 3rd quarter of 2009. For the quarter the company earned an operating profit of nearly USD 2.1 million, while net profit exceeded USD 1.1 million. These results represent significant improvement over the very difficult first two quarters of 2009, when the worldwide economic slowdown had a major impact on the company’s results.
The company achieved growth in its financial results in the third quarter thanks to consistent implementation of its strategy including improvement of the product portfolio and cost-cutting actions.
Financial results through 3 quarters of 2009
|
In USD m |
Q3 2009 |
Q2 2009 |
Q1 2009 |
Q3 2008 |
|
Revenues |
289,024 |
231,255 |
237,914 |
427,254 |
|
Gross profit |
14,421 |
11,687 |
7,179 |
21,304 |
|
Gross profit margin |
5.0% |
5.1% |
3.0% |
5.0% |
|
Administrative expenses |
(5,340) |
(5,356) |
(5,569) |
7,929 |
|
Selling expenses |
(6,989) |
(6,121) |
(6,118) |
(8,139) |
|
Operating profit |
2,092 |
210 |
(4,509) |
5,236 |
|
EBITDA |
2,800 |
919 |
-3,785 |
5,982 |
|
Net profit |
1,111 |
(313) |
(6,208) |
3,222 |
“The financial crisis hit our markets towards the end of Q3 2008, causing revenues to shrink – due to lower demand and decrease in average selling prices – and resulting in significant foreign exchange losses and net losses. The Company swiftly adapted to this changed environment by refining its product mix, reducing its expenses and focusing on improving its cash flow. As revenue picked up and local currencies appreciated against the U.S. Dollar, the Company delivered a bottom line profit in Q3 2009 and is more confident about the future.” – commented Marios Christou, ASBIS CFO.
The third quarter results confirm the growth trend in sales observed by the Company. Although sales of IT products are traditionally weaker in the summer months, ASBIS revenues in Q3 2009 were higher than those posted by the Company in the first two quarters of 2009. This was mainly due to increased demand and improved product portfolio.
Summary of growth trend:
- Revenue was 32.4% lower than in Q3 2008, but 21.5% and 25% higher than in Q1 2009 and Q2 2009 respectively, thanks to growing demand and recovery signals from markets.
- The company is again making a profit. Net profit after tax was USD 1,111, following three weak quarters in a row.
- There was an operating profit for the second quarter in a row. Profit from operations in Q3 2009 was about 10 times higher than in Q2 2009.
- There were no foreign exchange losses for the second quarter in a row, thanks to stabilization and appreciation of local currencies against the USD.
- Gross profit margin was 5.0%, identical to that in Q3 2008. This occurred mainly thanks to an improved product portfolio and lack of foreign exchange losses.
New Distribution Channels
The group is also focusing on improving its margins and decreasing its reliance on the traditional components segment by broadening its product portfolio and signing more distribution agreements with mostly finished-goods vendors. In Q3 2009 the company signed several new distribution agreements with various suppliers, the most important ones being:
- Distribution agreement with ASUSTeK Computer Inc., owner of the ASUS brand (for Croatia)
- Distribution agreement with Micro-Star International Co., owner of the MSI brand (for all the Baltic States)
- Distribution agreement with Symantec Corp. (for Egypt, Tunisia, Algeria, Morocco, Libya and Iraq)
- Distribution agreement with Kerio Technologies Inc. (for Slovakia and Croatia)
- ASBIS has been also appointed as an Apple Inc. Value-Added Distributor in Georgia and 9 CIS countries (for all countries of F.S.U. except Russia and Ukraine)
- Distribution agreement with Huawei-Symantec Technologies Co. for its line of servers and security products (for Poland)
- Distribution agreement with Kaspersky Labs, a leading developer of secure content management solutions, to obtain the status of Value-Added Distributor of Kaspersky products (for Bulgaria and Romania)
- Distribution agreement with Lenovo Group Ltd for IdeaPad and ThinkPad notebook lines, including ThinkPad, ThinkCentre, ThinkStation, ThinkServer and G, U and S series notebooks (for Belarus, Bulgaria, Croatia, Poland, Romania and Saudi Arabia, as new countries added to Russia and Ukraine)
- Distribution agreement with Actidata GmbH, producer of mass storage, backup and archiving systems (for Poland).
- Stronger development of finished products and software segments is part of the company’s strategy to benefit from its large geographical coverage by offering customers a complete range of hardware and software solutions. Due to its size and geographical coverage, even during the crisis times of 2008 and 2009, the Company has been able to upgrade its product portfolio. The Company’s strategy to achieve product portfolio upgrading includes:
- Development of the finished products arm by signing more distribution agreements with laptop producers for different countries. This has results in growth of the company’s market share in particular countries and a change in the overall breakdown of revenues. It is expected that the finished products arm will continue to increase its contribution to the company’s revenues in the foreseeable future.
- Development of the software products arm by signing distribution agreements with Microsoft for additional countries and with other software producers for different countries of the company’s operations. As gross profit margins on software sales are higher than in the components segment, it is expected that this development will positively affect the company’s results in the foreseeable future.
- Development of its private label brands (Canyon and Prestigio) by adding more products in the already enhanced portfolio.
“ASBIS is an organization with strong fundamentals and the skill to respond flexibly to changes in the market environment and the profile of product sales,” said Siarhei Kostevitch, Chairman and CEO of ASBIS. “Thanks to a careful analysis of the market situation at the end of 2008 and the beginning of 2009, we refined our product portfolio and focused on restructuring costs. These actions, combined with stepped-up sales activities, enabled us to improve our financial results and deliver a net profit”.
Detailed information on sales profile
Traditionally and throughout the recent years of the company’s operations, the region contributing the majority of revenues has been the Former Soviet Union. Due to the recent world financial crisis that has affected many markets of the company’s operations, revenues generated from F.S.U. countries decreased in Q3 2009 compared to Q3 2008.
Central & Eastern Europe, with significantly growing sales in countries like Slovakia (+25.45% in Q3 2009 compared to Q3 2008) and relatively stable sales levels in some other countries like the Czech Republic, became our leading sales region, with a 40.84% share in the company’s total revenues in Q3 2009.
However, due to the size and growth potential of the F.S.U. countries’ markets, it is expected that these markets will regain their leading position in the company’s revenue structure.
Revenue structure by regions in Q3 2009 and Q3 2008:
|
|
Q3 2009 |
Q3 2008 |
||
|
USD thousands |
% of revenues |
USD |
% of revenues |
|
|
Central & Eastern Europe |
118,043 |
40.84% |
123,466 |
28.90% |
|
Former Soviet Union |
90,619 |
31.35% |
211,844 |
49.58% |
|
Middle East and Africa |
43,177 |
14.94% |
45,996 |
10.77% |
|
Western Europe |
24,574 |
8.50% |
36,983 |
8.66% |
|
Other |
12,610 |
4.36% |
8,964 |
2.10% |
|
Total |
289,024 |
100% |
427,254 |
100% |
In addition to the main categories, the group is developing segments with high margins, like peripherals. In Q3 2009 the revenue from sale of peripherals increased by 105.8% to USD 15,122,000, from USD 7,350,000 in the corresponding period of 2008.
For additional information, please contact:
Mr Daniel Kordel, ASBISc Enterprises PLC, Investor Relations
Tel. +00 357 99 633 793
Tel. +48 509 020 021
E-mail: d.kordel@asbis.com
Mr Costas Tziamalis, ASBISc Enterprises PLC, Investor Relations
Tel. +00 357 25 857 000
E-mail: costas@asbis.com
Mrs. Iwona Mojsiuszko, M+G
Tel. +48 22 625 71 40
E-mail: iwona.mojsiuszko@mplusg.com.pl
ASBISc Enterprises Plc is based in Cyprus and specializes in the distribution of computer hardware and software, mobile solutions, blocks and peripherals, and a wide range of IT products and digital equipment. Established in 1995, the Company has a presence in Central and Eastern Europe, the Baltic States, the former Soviet Union, the Middle East, and North Africa, selling to 75 countries worldwide.
The Group distributes products of many vendors and manufactures and sells private-label products: Prestigio (LCD monitors, laptops, external storage, leather-coated USB accessories, GPS devices, etc.) and Canyon (MP3 players, networking products and other peripheral devices).
ASBIS has subsidiaries in 27 countries, more than 1,000 employees and 30,000 customers.
The Company’s stock has been listed on the Warsaw Stock Exchange since October 2007 under the ticker symbol “ASB” (ASBIS).
For more information, visit also the company's website at www.asbis.com