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Asbis sales soar in first quarter

by Stuart Wilson, Friday 9 May 2008

Emerging markets distribution powerhouse Asbis has revealed first quarter 2008 sales up 38.9% year-on-year at US$360m. Asbis’ after-tax profits almost tripled to US$5.53m, a profit margin of 1.5%. Sales of CPUs climbed 34.7% year-on-year, contributing US$95.67m of Asbis’ total first quarter revenues. Microsoft sales more than tripled year-on-year boosting first quarter software sales to US$54.84m.

Of the total first quarter revenues of US$360m, sales in the former Soviet Union contributed 44%, Eastern Europe and the Baltics chipped in with 33% while Western Europe accounted for 9%. Sales in the Middle East and Africa more than doubled year-on-year to US$42.88m – 12% of Asbis’ total first quarter sales.

Asbis own labels also fared well with revenues derived from Canyon and Prestigio-branded kit climbing 18.1% to US$21.1m. Laptop revenues more than tripled year-on-year to US$45.24m. Hard disk drive (HDD) revenues slipped 6.1% at Asbis -despite the fact that the company sold a greater number of units - as price erosion continued to impact the sector.

“Dynamic growth in our financial performance in first quarter 2008 reflects consistent execution of our strategy and development of operations in the region of Central and Eastern Europe and the countries of the former Soviet Union where we are one of the key players,” said Siarhei Kostevitch, CEO at Asbis.

“We believe that these are very promising markets with good prospects where we expect growth in the demand for our products. In the near future, we are also expecting improvements in the export regulations governing imports, among others on the Russian and Ukrainian markets, which will have a positive impact on the demand for our products,” he added.

Asbis’ financial report also gave some glimpses into the highlights of the first quarter and the company’s ambitious expansion plans. Asbis experienced tremendous sales growth of Microsoft software licence sales in the Russian Federation during the first quarter of 2008. The company attributes this to the combined efforts of the Russian Government and Microsoft to eliminate illegal software in the country and the abolition of VAT from the sale of such non-exclusive rights in Russia. However, Asbis believes that its current healthy margins from Microsoft business are not sustainable and they are expected to gradually decrease.

Asbis’ Middle East operations have seen significant growth and the company has now acquired a warehouse in Jebel Ali free zone in the UAE. The new offices and warehouse are expected to be operational during the second quarter. Asbis is also considering opening a new subsidiary in Saudi Arabia after gaining Toshiba rights in the Kingdom.

Over in Turkey, Asbis is in the final stages of launching its own Greenfield operations. This new business unit, in a country with 60 million inhabitants and a total PC market of 2 million units per annum, is expected to contribute significant additional value to the company in the latter end of 2008 and beyond.

In late 2007 Asbis also acquired land in Bratislava, Slovakia to build an office and warehouse on. With this facility now up and running, the company hopes that it will increase business for Asbis Slovakia and the new vendors the unit has brought on board during the last quarters. Asbis Slovakia has struck a deal with Sun Microsystems and this is expected to significantly boost profit margins.

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