ASBISc Enterprises, the EMEA emerging markets distributor, significantly improved its net profitability in Q4 2014, in spite of Russia and Ukraine market turbulence.
Revenues in Q4 2014 were $458.59m and grew compared to $388.66m in Q3 2014 but decreased by 20.07% compared to $573.71m in Q4 2013. Even though sales and gross profit declined, the business improved its profitability due to lower selling and admin expenses and effective FX hedging. Selling expenses in Q4 2014 were reduced by more than $6m, or 39.05%, compared to Q4 2013. Admin expenses decreased by $1.7m, or 20.63%.
For the twelve months of 2014, the Group’s revenues were $1.55bn, in the mid-range of the Company’s forecast for Y2014, which assumed sales between $1.45bn and 1.60bn. Net profit after tax (NPAT) for Q1-Q4 2014 was $979k, which is close to the lower range of the forecast value (from $1m to 2m). This may be considered satisfactory considering the H1 2014 losses, it says.
It anticipates a continuation of the unfavourable market conditions in Russia and Ukraine, and therefore further development of sales in the CEE and WE regions will be its main focus. The management plan further reductions in selling, admin and financial expenses for 2015, anticipating that it will be another tough year.
Siarhei Kostevitch, CEO and Chairman of ASBISc Enterprises Plc, commented: “Having in mind how tough market conditions are these days, we consider the Q4 2014 results a great achievement. Not only have we produced a significant net profit, but we have also successfully cut costs. First and foremost, we improved cash flow from operations by more than $70m and closed the year with a significant increase in cash.”
Kostevitch continued: “At this moment in time, we do not expect the markets in Russia or Ukraine to get any better in the following 6–7 months. Therefore, we plan to increase sales and profits in other geographies that we started to develop in 2014 to replace sales lost in the FSU region. In order to do so, we will continue cost reductions on one hand and work on increasing margins on the other. This dual task is not easy, but as the Q4 2014 results show, it is feasible. Currently we are re-scaling the Company and considering announcing a Y2015 financial forecast in May.”