Distribution results reveal profit pressures
Distribution outfits Asbis and Logicom have both recorded net profits for the first half of the year, but the level of their earnings reiterates the exhausting task that IT wholesalers face to make their endeavours financially worthwhile.
Distribution outfits Asbis and Logicom have both
recorded net profits for the first half of the year, but the level of their
earnings reiterates the exhausting task that IT wholesalers face to make their
endeavours financially worthwhile.
Components specialist Asbis, which typically harvests around
10% of its business from the Middle
East, registered a net profit of $3.1m for the opening six months of
2007, representing a 27% increase on the corresponding period the year before.
However, that return works out at less than 1% of the $540m it generated in
sales over the same period, underscoring the ferociously competitive nature of
the components channel.
Exploiting
economies of scale and product volume clearly remains a key factor for Asbis,
which boasts subsidiaries throughout Eastern Europe, CIS and the Middle East. "We are pleased to report these results and
have further progressed our strategy of developing our distribution business
alongside our own-brand Canyon and Prestigio products," said Siarhei Kostevitch,
chief executive at Asbis. "We announced [in July] that the company is
contemplating a fund raising and listing on the Warsaw Stock Exchange in the
fourth quarter of 2007. The company continues towards this target and will make
further announcements as appropriate."
Asbis remains on course to top the
$1 billion mark this year, reaffirming its position as one of the most dominant
components and peripherals suppliers in the EMEA region. The company also
revealed that it strengthened its balance sheet position during the first half
of the year, leaving cash and equivalents totalling $15m.
Meanwhile,
networking and software focused Logicom, which has offices in the Middle East
and Southern Europe, boosted group sales by 17% to $183m during the first half
of 2007, largely as a result of its achievements in markets such as
Greece, Italy and Turkey. However,
its $4.6m net profit comprised just 2.5% of sales, even though it climbed 7% on
the previous year. Gross profit margin slipped from 7.7% to 7.4% year-on-year
due largely to the increase in sales from distribution, rather than its software
and solutions activities.
Recent market reports say the distributor believes the results are "satisfactory", adding that its next set of financial results covering the nine-month period will also show an improvement on the previous year.
Copyright: ITP Techology Channel (29 August 2007)
Disclaimer: The information contained in each press release posted on this site was factually accurate on the date it was issued. While these press releases and other materials remain on the Company's website, the Company assumes no duty to update the information to reflect subsequent developments. Consequently, readers of the press releases and other materials should not rely upon the information as current or accurate after their issuance dates.
