AB Group ends 2017 with record-breaking 2.0 billion EUR in revenue
· A stronger position as the market leader in Poland and the entire CEE region: solid and stable profits, safe financial indicators, high operating cash flow and lowest SG&A costs in the industry;
· Confirmed reliability of tax settlements – all fiscal audits completed at AB SA;
· Modern Distribution Centre in Magnice: high season in Q4 confirmed the efficiency of the automated distribution centre
· Dynamic growth of segments such as cloud, gaming, VAD and digital signage, as well as development of a complementary offer outside IT: consumer electronics and household appliances, toys, smart home.
In the second quarter of the 2017/2018 financial year (which ended on the 31st of December 2017), the AB Group increased its year-on-year revenue by 8,5% to EUR 660 million. The company’s EBITDA result amounted to over EUR 10 million, while the net profit was over EUR 6 million. In the entire calendar year 2017, the AB Group generated over 27 million EUR EBITDA and over 15 million EUR net profit, with record-breaking sales revenue of EUR 2.0 billion.
“We generate solid, stable financial results and systematically increase the scale and scope of our operations based on the largest client portfolio in the CEE region in order to maximise profits in the long-term perspective.In the IT distribution industry, margins follow the general shape of a sinusoid, depending on the intensity of competition. For more than 27 years of its history, AB Group has proved that it can weather every wave of market changes and emerge stronger than ever before. We are currently strengthening our top position in Poland and the CEE region; additionally, in the fourth quarter of the year we advanced to the 8th place in the whole Europe”, comments Andrzej Przybyło, founder, author of success and Chairman of the Board of AB SA.
In the past quarter, as well as throughout the year, the business of AB Group, diversified both from the standpoint of geography and the company’s product portfolio – both the relatively new product areas, such as cloud solutions and accessories for gamers, as well as more mature business projects, such as digital signage, value-added sales in the business segment (VAD) or the consumer electronics and household appliances segment – were distinguished by their growth dynamics. The AB Group, which is the top distributor of Apple products in the CEE region, also saw a positive effect of the premieres of iPhone X and iPhone 8, which has shown the potential of market demand for innovative products.
Solid and reliable finances
For years, AB has been consistently valuing stability, transparency and security, and one of the results of this is a clear situation regarding the correctness of tax settlements.
“We have been always reliably keeping our tax settlements. This is confirmed by the results of all completed financial audits.Currently, there are no ongoing audits in AB”, says Grzegorz Ochędzan, CFO at AB S.A.
It is also worth noting that in the calendar year 2017, AB Group generated high positive cash flows from operating activities (26 million EUR), acting on the basis of diversified debt, mostly of a long-term nature.
“Financial institutions value our results.What is more, our extensive financial capabilities enable us to take advantage of the opportunities for further growth and continue the implementation of our development strategy with intrinsic security”, Grzegorz Ochędzan emphasised.
The highest efficiency
The final quarter of the calendar year is the season with the highest turnover in the electronics distribution industry. Thus, the operational efficiency of the distributor becomes even more important.
“The new distribution centre in Magnice near Wrocław works very well. The fourth quarter was record-breaking in terms of the number of shipments and speed of order processing. Despite the fact that the warehouse is not yet operating at full capacity, since there was no such need yet, we have handled the largest number of orders in history without increasing staff numbers,” said Zbigniew Mądry, Member of the Board and Sales Director at AB S.A.
Warehouse and sales process automation are important in AB Group not only due to the ongoing e-commerce revolution, but also in the context of the phenomena observed on the labour market, which is why the warehouse in Magnice gives AB a significant competitive advantage in the industry.
“The road we have followed is inevitable in order to continue to grow and run business in an effective way.Our investments are already completed, and now it is time for us to draw benefits from them,” Zbigniew Mądry emphasised.
Most importantly, for many years AB Group has maintained the lowest general administrative and sales expenses indicator in relation to turnover in the industry at only 2.6%. This allows the company to win in a changing external environment regardless of the phase of the business cycle.
The most extensive offer, high growth and favourable forecasts
AB Group is the largest distributor in the CEE region, offering nearly 100,000 products available in stock. Moreover, the company continues to systematically expand its product portfolio. It is worth noting that in 2017, the company signed or expanded distribution agreements in segments such as IT (with a number of companies including Canon, Epson, Fibaro, Logitech, Zyxel), household appliances and audio/video devices (including Sharp, Solgaz, TCL), consumer electronics and accessories for gamers (including Archos, Asus, Razer), and a broad variety of toys. Additionally, it is worth recalling that AB Group is the leading partner in the CEE region for global giants of the IT industry, such as Microsoft, HP Inc., Hewlett-Packard Enterprise, Lenovo, Asus, Dell and Apple.
AB Group has already achieved the leading position on the Polish cloud market in a strategic partnership with Microsoft and benefited from numerous competitive advantages, recording an average monthly growth of as much as 21% throughout 2017.
“We believe that interest in cloud services, as well as smart home solutions will keep growing, and we have been successfully building a specialised sales channel.We already have 130 partners who are responsible for installing the solutions we distribute”, said Zbigniew Mądry, Member of the Board of AB S.A.
Last year, the smart home market in Poland alone was expected to have a value of almost EUR 29 milion, while in just three years it is expected to grow to as much as EUR 168 million, according to MEC Analytics forecast. Research shows that 70% of Poles believe that in five years' time smart solutions will become a standard. AB Group is prepared for this upcoming market revolution, just as it is the case with the dynamic growth of e-commerce. AB Group has established itself as a leader of the sector, offering a comprehensive portfolio of e-commerce tools.
It is also worth mentioning the growing digital signage market (electronic large format displays), where AB Group is the leader of the distribution market with 70% growth of sales year on year.
The main growth drivers for the Security category are the new GDPR regulations (personal data management) and the overall increase in cybersecurity awareness among users. Of course, it is not without significance that the scale of threats is constantly increasing.
“As AB Group, we are ready to take advantage of trends and technologies which will be dynamically developing in the years to come”, Zbigniew Mądry emphasised.
AB Group also gains from the increased significance of value-added distribution (VAD), noting a 21% growth in turnover in 2017.
“As a VAD distributor, we take advantage of our resources and assets, such as a dedicated team of engineers and project managers, our competence centre or technological resources. New suppliers of advanced solutions have chosen us due to our solid technical, logistic and financial resources, among many reasons. Moreover, we are a leading distributor for Hewlett-Packard Enterprise, the product leader in the VAD segment,” Zbigniew Mądry added.
According to forecasts prepared by PMR Research, Polish companies intend to increase their IT spending by 6% in 2018. This is due to the good economic situation and the fact that after a period of low investment, companies are now catching up and increasing their development spending. As a result, in the fourth quarter of 2017, AB Group observed a growth of demand from the Polish medium and large enterprises, as well as in servicing of infrastructure projects.