ASBIS 2008 Revenues Grew by 7.1% Y-O-Y
Limassol, Cyprus, February 27th, 2009 — ASBISc Enterprises Plc, a leading distributor of IT products on the markets of Central and Eastern Europe, the former Soviet Union, the Middle East and North Africa, increased its revenues for 2008 as a whole by 7.1%, to US$ 1.5 bn from US$ 1.4 bn in 2007. Net profit after tax was US$ 5.1 m in 2008 compared to US$ 18.7 m in 2007.
ASBISc’s fundamentals and market position remain strong and the company is well prepared for the worsening global market situation. ASBIS has also undertaken several actions to mitigate the effects of the crisis and currency vulnerability on its results.
Key events of 2008:
- Revenues in 2008 increased by 7.1% to US$ 1,496 m, from US$ 1,397 m in 2007.
- Gross profit for the year increased by 14.1% to US$ 77.5 m, from US$ 67.9 m in 2007. The gross profit margin increased to 5.2%, compared to 4.9% in 2007.
- EBITDA decreased by 30.3% to US$ 19.2 m, from US$ 27.6 m in 2007. EBITDA margin was 1.29%, compared to 1.98% in 2007.
- Net profit after taxation in 2008 was US$ 5.1 m, compared to net profit of US$ 18.7 m in 2007.
Although the world financial crisis has affected the company’s results in several ways, ASBIS has noticed good sales growth on some product lines, including 120% growth in the laptop segment, 16.5% growth in the software segment, and 51% in peripherals. The company also noted stable revenues from the CPU segment, at almost US$ 400m for 2008 as a whole.
ASBIS is also developing its own brands, Canyon and Prestigio, which allows the Company to achieve strong, double-digit gross margins. In 2008, private-label brands contributed more than 5% to total sales revenue. It is the Company’s intention to develop sales of its own brands so that in the medium term their contribution to total sales revenue will reach 10-12%.
Financial performance – details
|
In USD m |
Q4 2008 |
Q4 2007 |
Change |
2008 |
2007 |
Change |
|
Revenues |
364.1 |
464.2 |
-21.5% |
1,496.1 |
1,397.3 |
+7.1% |
|
Gross profit |
14.8 |
25.7 |
-42.2% |
77.5 |
67.9 |
+14.1% |
|
EBITDA |
-1.5 |
12.4 |
– |
19.3 |
27.6 |
-30.1% |
|
Net profit |
-5.4 |
9.4 |
-42.5% |
5.1 |
18.7 |
-72.7% |
As the Company reported after publication of its 3rd quarter results, the world financial crisis, which has led the global economy into a dramatic slowdown, has affected the Company’s results. This impact continued in Q4 2008.
Traditionally IT distributors generate 40-50% of their annual profitability in the last quarter of the calendar year (Q4). This crisis led to several adverse effects, including lower demand in some countries where the company has operations, due to decreased access to credit facilities by customers and decreased purchasing power of consumers.
Although the annual increase in revenues and gross profit reflected an increase in units sold and larger coverage of the EMEA region, the better coverage of the region was not enough to offset the lower demand deriving from the world financial crisis, which impacted all markets where the Group operates, especially FSU countries (Russia and Ukraine).
The Company was also negatively affected by the sharp depreciation of local currencies against the US dollar, the Group’s reporting currency. Net foreign exchange losses were about US$ 10 million for the whole financial year ended 31 December 2008.
Actions undertaken
Following the effects of the world financial crisis in Q3 and Q4 2008, the Company has undertaken several actions to mitigate the effects of the crisis and currency vulnerability on its results:
- In November 2008 it initiated a cost-saving program works on improving operational efficiency and better manages its working capital cycle. All these actions are expected to yield up to US$ 1.4 m in savings in the first quarter of 2009 and up to US$ 1.6 m per quarter from the second quarter onwards.
- ASBIS has also decided to centralize its European logistics in distribution center in Prague, which is significantly closer to the Company’s main European markets. Therefore the Dutch distribution centre was closed. This action stand-alone will allow the Company to save up to US$ 1.4 m in 2009.
- The Company has also increased its US Dollar-denominated sales, to decrease its foreign exchange exposure (as it mainly purchases goods in US dollars and principally sells in local currencies).
- ASBIS has improved both short-term and long-term hedging strategies by increasing loans, factoring and other hedging tools in local subsidiaries.
“The second half of 2008, and especially Q4, was difficult for our Company and the whole sector,” said ASBIS CEO Siarhei Kostevitch, “due to the world financial crisis and steep depreciation of local currencies (such as the Russian Rouble, the Hungarian Forint, the Czech Koruna and the Polish Zloty) against the US dollar, which is our reporting currency. The uncertainty created by the crisis has severely affected demand, which in some countries was up to 50% lower than projected. However, with extensive infrastructure across the EMEA region, we have a strong foundation going forward. We can partially offset lower demand in some countries (e.g. Ukraine and Russia) with increased sales in other regions where we operate – especially in the Middle East and Africa, where the biggest growth is expected, but also in CEE countries like Slovakia and Belarus, where we noticed good growth during the difficult times of 2008. We also strongly believe that our investments during the last year in Turkey, Italy, Kazakhstan and Latvia, and operations through the 80% subsidiary Megatrend d.o.o. in Bosnia & Herzegovina, will deliver good results to partially mitigate the impact of the crisis in 2009.”
Detailed information on sales profile in 2008
According to Laurent Journoud, ASBIS Executive Vice-President, Sales and Marketing: “Although the world financial crisis has affected our results in several ways, we have noticed good sales growth on some product lines, including 120% growth in the laptop segment, 16.5% growth in the software segment, and 51% in peripherals. We also noted stable revenues from the CPU segment of almost US$ 400 m for the whole of 2008. Looking at the geographical revenue breakdown, Russia still remains our No. 1 market, with 2008 annual growth of 8.1%. Slovakia became our 2nd largest market with annual growth of 24.1%, ahead of Ukraine, which shrank by 32.6% due to political and economic difficulties. Our good growth of 44.9% y-o-y came and is expected to continue to come from MEA countries, especially from Turkey and the Middle East, where we have completed our investments.”
The Group is focusing on decreasing its reliance on the traditional components segment by broadening its product portfolio (i.e. trying to benefit from its good cooperation with Microsoft by signing distribution agreements for new countries like Croatia in November 2008) and signing more distribution agreements with finished-goods vendors. During the three months ended December 31st 2008, the Company signed several new distribution agreements with various suppliers, the most important ones being Dell, Brightpoint, Microsoft, CNT and LG Electronics, for distribution of their products in Russia and other countries in Eastern Europe, the Middle East and Africa. A total of 32 distribution agreements were signed by the Company and its subsidiaries in 2008.
For additional information, please contact:
Daniel Kordel, ASBISc Enterprises PLC, Investor Relations
tel. +48 509 020 021
tel. +357 97 633 793
e-mai:l d.kordel@asbis.com
Constantinos Tziamalis, ASBISc Enterprises PLC, Investor Relations
tel. +357 25 857 000
e-mail: costas@asbis.com
Iwona Sacewicz, M+G
tel. +48 22 625 71 40
tel. +48 501 183 386
e-mail: iwona.sacewicz@mplusg.com.pl
ASBISc Enterprises Plc is based in Cyprus and specializes in the distribution of computer hardware components, 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 USSR, the Middle East, and North Africa.
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 26 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). More information about the company: www.asbis.com