Distributor AB counters margin squeeze with non-IT portfolio

AB Group says it saw rising margin pressure in Q2, but is growing in non-IT products - radio & TV equipment, household appliances and smart home solutions. “We are satisfied with the results for the reported period. AB Group has maintained its position as the undisputed market leader, accumulating capital and reinvesting profits in further stable growth,” says Andrzej Przybyło (below), President of the Board of AB SA.

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In the 2016/2017 financial year (ended 30 June), AB Group increased revenue on the CEE market by €168m (10%), to €1.92bn, with €27m EBITDA (+3% yr/yr) and €15,7m net profit (+5% yr/yr). In Q4 of the 2016/2017 financial year alone (Q2 of 2017 calendar year), AB Group saw nearly €460m revenue, generating over €5.4m EBITDA and €3m net profit, it says.

“When building robust foundations for further growth of financial results, we focus on stability and diversification, both in terms of business and finance,” says Grzegorz Ochędzan, Finance Director at AB SA.

“In this respect, another successful issue of unsecured 5-year bonds in June, without any bond covenants, is a proof of the trust that the experts at financial institutions place in our strategy, market position and financial condition, and our perspectives,” Grzegorz Ochędzan adds.

In the 2016/2017 financial year, AB Group signed new distribution contracts or extended the existing ones in the field of IT, utility electronic equipment and gaming, with, among others Microsoft (XBox consoles, Surface devices), Canon (advanced printers and copiers), Zyxel and D-Link (network solutions), Fractal Design (PC housings), Legrand (UPS and power strips), SynoLogy (data centre), Asus and Razer (gaming accessories), Insta360 (digital cameras), Trybeco (electrical vehicles) or Socomec (IT security). In the field of radio & TV equipment, and household appliances, significant contracts include those signed with Samsung (household appliances), TCL (radio & TV equipment), Epson (advanced home theatre projectors) or iRobot (Roomba vacuum cleaners).

AB Group’s business is also based on retail franchise chains, operating under eight different brands in Poland, Czech Republic and Slovakia (in Poland: Alsen - IT; Optimus - IT integrators; Kakto - radio & TV equipment/household appliances; Wyspa Szkrabów - toys). The retail franchises comprise over 1.6 thousand outlets, which makes it the largest retail chain in the industry in the CEE region, it says. In the 2016/2017 financial year, sales to own franchise chains in AB Group rose by 12% YTY, with a stable number of trade partners.

“The range of products available in store, our logistic efficiency and the relations with our trade partners which we have been grooming for 26 years, have allowed AB Group to become the leader in the sales of main product categories in IT and utility electronic equipment in the entire CEE region,” says Zbigniew Mądry, Sales Director at AB.

“The world is going up in the cloud and even though the market is still a budding one, AB Group has already achieved the leading position among distributors. Our strategic partnership with Microsoft is key for our presence on this market. We have been selected as the Cloud Solution Provider (CSP) for the region. We have developed a regional partner allowing us to service several hundred partners. We are the undisputed leader in the distribution of cloud computing services,” emphasises Zbigniew Mądry.