Results of 1st quarter of 2019 in line with expectations with strong profitability

ASBISc Enterprises Plc, a leading distributor of IT products on emerging markets of Europe, the Middle East and Africa, generated good financial results in the 1st quarter of 2019, in line with expectations. Sales revenues in the period were USD 417.3 million, compared to USD 503.3 million in the same period of the previous year. Gross profit on sales in 1Q 2019 was USD 21.1 million (vs USD 22.8 million in 1Q 2018), and operating profit (EBIT) was USD 4.6 million (vs USD 5.3 million in 1Q 2018). Despite the lower revenues than in the 1^st quarter of 2018, the Group’s net profit in the 1^st quarter of 2019 was equally strong, at USD 1.7 million.

ASBIS remains the distributor of first choice for many global IT manufacturers, and the Group’s strategy is to generate the best possible results for its shareholders. In 1Q 2019 the greatest share of the Group’s revenues was in the Former Soviet Union (49% share) and Central & Eastern Europe (26% share). The largest sales in the quarter were for smartphones, processors, accessories and multimedia.

The Group is expanding its portfolio of higher-margin own brands. ASBIS now has four own brands in its portfolio: Prestigio, Canyon, Perenio and Atlantech.

The Group published its financial forecast for 2019 on 27 March 2019. It calls for revenue between USD 1.7 and 1.9 billion and net profit after taxation between USD 8.5 and 10 million. Following publication of the financial results for the 1^st quarter of the year, ASBIS maintains its financial projections.

On 27 March 2019 the Company’s board of directors announced a decision to recommend at the next general meeting of shareholders that the Company pay a dividend from the financial results earned in 2018. At the general meeting, the board recommended payment of a dividend of USD 0.05 per share, totalling USD 2,775,000. On 8 May 2019 the AGM of shareholders adopted a resolution approving the payment of a dividend in the amount proposed by the board of directors. The record date for the dividend was set at 21 May 2019, with a dividend payment date of 4 June 2019. Thus the total dividend from the profit for 2018, including the advance paid on 20 December 2018, will be USD 0.10 per share—a total disbursement of USD 5,550,000.

Siarhei Kostevitch, CEO and Chairman of ASBISc Enterprises Plc, commented: “The 1^st quarter of 2019 was in accordance with our expectations. The same period of the previous year was a time of dynamic sales growth for us due to numerous one off factors which led to tremendous growth rates, but we knew that it would not continue. We accounted for this when publishing our forecast, which we are achieving in line our assumptions. Looking at the results for the 1^st quarter of this year, we are confident that other things being equal and no unfavourable factors arise, we will achieve the forecast for 2019 which we announced in March.”

Marios Christou, CFO of ABISc Enterprises Plc, commented: “We have completed the quarter and we consider it to have been a successful one and consistent with our expectations. It is notable that despite a decline in revenue, our profitability remains at a level similar to the 1^st quarter of 2018. This confirms the implementation of our strategy and the promise we gave to the market and our shareholders for this year, namely a focus on higher margins rather than sales. Last year we proved that ASBIS can adapt to a highly competitive environment and changing market conditions, while gaining increased market share. Now we are focusing our business on profitability and taking advantage of all opportunities presented to our company.”

DETAILED SALES DATA—SALES BY REGION

Siarhei Kostevitch, CEO and Chairman of ASBISc Enterprises Plc, commented: “The regions of the Former Soviet Union and Central & Eastern Europe have traditionally accounted for the largest share of our revenues. That did not change in this period, but in the 1^st quarter of this year we did note a decline in sales mainly in Ukraine and Kazakhstan. This resulted primarily from the very high base from last year, when we generated over 90% sales growth. In sum, the share of countries from the Former Soviet Union in total revenue fell slightly, to 49.16% in 1Q 2019, from 50.07% in 1Q 2018. The region of the Middle East and Africa, where revenue is driven by the results in the United Arab Emirates, performed very well, growing by 20.9% from the 1^st quarter of 2018.”

The table below provides a geographical breakdown of sales in the three month periods ended March 31st, 2019 and 2018.

DETAILED SALES DATA—SALES BY COUNTRY

A country-by-country breakdown provides a clearer picture of the sales results discussed above. The decline in the Former Soviet Union was driven by the trends in Russia (+3.9% in 1Q 2019), Ukraine (˗17.3% in 1Q 2019), Kazakhstan (˗44.2% in 1Q 2019) and Belarus (˗14.9% in 1Q 2019), compared to the 1^st quarter of 2018. The decline in sales in Central & Eastern Europe resulted from drops in Slovakia (˗4.4% in 1Q 2019), Czechia (˗36.2% in 1Q 2019) and Romania (˗38.7% in 1Q 2019), compared to the 1^st quarter of 2018.

In the 1^st quarter of 2019 Poland joined the top 10 countries in terms of sales, generating revenue of USD 9.4 million.

DETAILED SALES DATA—SALES BY PRODUCT LINE

In the 1^st quarter of 2019 the Group concentrated on generating higher margins rather than higher revenues, which translated into a decline in revenue in some key product lines.

The table below sets a breakdown of revenues, by product lines, for Q1 2019 and Q1 2018 (in US$ thousand):

For additional information, please contact:  

Iwona Mojsiuszko

8Sense Public Relations

Tel. +48 502 344 992

E-mail iwona.mojsiuszko@8sensepr.pl              

About ASBISc Enterprises Plc

^{ASBISc Enterprises Plc is one of the leading distributors of IT industry products in the emerging markets of Europe, the Middle East and Africa (EMEA): Central and Eastern Europe, the Baltic republics, the former Soviet Union, the Middle East and North Africa, combining a wide range geographical operations with a wide portfolio of products distributed in the "one-stop-shop" model.}

^{ASBISc Enterprises Plc is based in Cyprus and specializes in the distribution of computer hardware and software, mobile solutions, IT components and peripherals, and a wide range of IT products and digital equipment. The Company was established in 1990, currently selling to 60 countries worldwide.}

^{The Group distributes products of many vendors, and manufactures and sells private-label products: Prestigio (smartphones, tablets, external storage, leather-coated USB accessories, GPS devices, Car-DVRs, Multi-boards etc.), Canyon (MP3 players, networking products and other peripheral devices), Perenio („IoT”) and Atlantech (servers, data storage, data center solutions).}

^{ASBIS has subsidiaries in 26 countries, about 1,470 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, also visit the Company’s website at}

^{www.asbis.com or investor.asbis.com}