ASBIS finished a very challenging quarter sustaining a high Gross Margin; confirms its forecasts for 2024

ASBIS Group (WSE: ASB) - a leading Value Add Distributor, developer, and provider of ICT, IoT products, solutions, and services to the markets of Europe, the Middle East, and Africa (EMEA), despite the extremely difficult market environment, achieved fair financial results in the first half of 2024, which allow the Board of Directors to maintain the published financial forecast for 2024, according to which revenues are expected to range between USD 3.1  and USD 3.4 billion, while net profit after tax between USD 60 and USD 64 million.

Revenues in the first half of 2024 amounted to almost USD 1.36 billion (nearly PLN 5.5 billion), while the Group's net profit amounted to USD 20.1 million (PLN 80.7 million). In the second quarter of 2024, ASBIS generated USD 645.9 million (PLN 2.6 billion) in revenues and USD 6.1 million in net profit (PLN 24.7 million).

The Group maintained a high gross profit margin, which amounted to almost 8%, both in Q2 and  H1 2024.

OTHER IMPORTANT EVENTS:

• The largest ASBIS country in terms of sales was Kazakhstan, while the Commonwealth of Independent States (CIS) region still maintained the largest share in Group revenues (over 42%).
• Poland has become a permanent member among the top 10 countries moving up to 6th place in the first half of this year with revenues of over USD 61.6 million (an increase of over 15% compared to the same period last year),
• ASBIS paid a final dividend from the Company's 2023 profits of USD 0.30 per share. Including the interim dividend paid out last December, the total dividend was USD 0.50 per share which is the highest dividend paid to shareholders in the more than 30-year history of ASBIS.
• ASBIS expanded its network of iSpace stores with Apple products and opened three new stores: in Moldova (Chisinau), Armenia (Yerevan) and Kazakhstan (Atyrau). ASBIS currently manages a total of 34 iSpace stores where Apple products are available.
• Breezy, an international Trade-In supplier and a subsidiary of ASBIS, commenced operations in Azerbaijan. This is the seventh country where Breezy operates, supporting electronics retailers and telecom operators in implementing a sustainable approach to electronics.
• ASBIS has signed new distribution agreements and expanded existing ones to new countries in its region with the following companies: QNAP Systems, Micron Technology, Pure Storage and Jabra.

“The second quarter of the year is historically the weakest in the entire industry, including ASBIS”, said Serhei Kostevitch, CEO of ASBIS Group. “This time, however, this weakest quarter of the year has encompassed very unfavourable market factors, such as the still ongoing illegal imports in Kazakhstan, the intensification of the war in Ukraine and the slowdown of large expenditures from EU funds in Slovakia, which is our fourth largest market. Despite these events, we have managed to maintain a relatively high gross margin on sales, which we are very pleased about. We do believe that in the second half of 2024 there will be an improved  market trend, which will allow us to meet our financial forecast. We can already see a positive impact from South Africa, where we recorded much higher sales in July. We are also very much counting on Breezy, which is developing dynamically, conquering new markets.”

FINANCIAL RESULTS

A summary of the financial results of the ASBIS Group in the second quarter and first half of 2024 is presented in the tables below (presentation of the results are firstly in USD and then in PLN). USD remains the official reporting currency of the Group.

Financial results of the Group in Q2 and H1 years 2024 and 2023
USD million

PLN million

DETAILED SALES DATA

SALES BY REGION

The Commonwealth of Independent States ("CIS") and Central and Eastern Europe (“CEE”) regions traditionally account for the largest share of the Group's revenue. This trend has remained intact, both for Q2 2024 and H1 2024.

In Q2 2024 and H1 2024, revenues generated in the CIS region decreased by 24.9% and 21.4%, respectively, compared to the corresponding periods in 2023, while sales in CEE and other core regions  have significantly increased. The main reason for lower sales in the CIS region was the exceptionally difficult market condition in the Group's core markets, especially in Kazakhstan and Ukraine.

The Middle East and Africa region’s share increased in both Q2 2024 and H1 2024 to 17.57% (from 15.22% in Q2 2023) and 17.28% (from 13.93% in H1 2023), respectively.

The Western Europe region’s share also increased to 13.91% for Q2 2024 (from 8.71% in Q2 2023) and 11.63% for H1 2024 (from 8.56% in H1 2023).

Geographical structure of ASBIS sales in H1 2024 and H1 2023

SALES BY COUNTRY

Country-by-country analysis shows a large drop in revenues in Kazakhstan, the Group's largest market, which was the result of unofficial imports of many product groups from unofficial distributors and unofficial channels.

The countries with the largest revenue growth were, among others: Poland, whose sales increased by almost 20% in Q2 2024 and by 15.1% in H1 2024 compared to the same periods in 2023, and the United Arab Emirates, which generated a 17.6% year-on-year revenue growth in H1 2024.

Structure of revenues – Top 10 countries in H1 2024 and H1 2023 (USD ’000)