Transcript 2009 Q4 Presentation (PPS, 2 MB)

ASBISC Enterprises PLC
Q4 2008 and 2008 results
Strong to face the new challenges
Siarhei Kostevitch, CEO
Marios Christou, CFO
Warsaw, February 27th, 2009
Daniel Kordel, IRM
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Important notice
This presentation contains forward looking statements. Actual results may
differ materially from the anticipated results as a consequence of certain risks
and uncertainties, including but not limited to general economic conditions in
the markets in which ASBISc operates, and other risks detailed in our semiannual and annual reports. For the most recent description of the risk factors
please see Risk Factors section in the prospectus and our periodical reports.
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Company and market overview
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Introduction to ASBIS
Almost 18 years of experience
• Established in 1990 in Minsk, headquartered in Limassol (Cyprus) since 1995
• Experienced management team combined with local expertise
Leading IT distribution across EMEA markets
• Broad geographic coverage combined with strong local presence
• Extensive infrastructure - physically present in 26 countries, with mainly fully owned subsidiaries,
• Selling to more than 30.000 active customers
• Unique B2B on-line solution applied to over 55% of sales value
• Complete solutions to producers and integrators of server, mobile and desktop segments
First choice distribution partner for global industry players
• Successful long-term co-operation with top global vendors of IT components
• Broadening of distribution agreements for new countries and already developed ones
Wide product portfolio, distributed on a ‘one-stop-shop’ basis
• A-branded laptops, servers, desktop PCs, successful own brands: Prestigio and Canyon
• Price and stock rotation protection granted by suppliers
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Full coverage of EMEA region
• Three main distribution centres in
Prague, Helsinki & Dubai
• New distribution center in China,
Shenzen for own brands
• 33 local warehouses in 26 countries
• 30 000 active customers
Helsinki
Jaelfaella
Tallinn
• JIT stock replenishment system
• Centralised purchasing power
Riga
Ballinloough
Vilnius
Amsterdam
Moscow
Minsk
Warsaw
Kiev
Kosice
Budapest
Ljubljana
Zagreb
Belgrade
Bucharest
Sofia
Roma
Sarajevo
Istanbul
• Local presence, know-how and
customer technical support
Prague
Bratislava
Algiers
Almaty
Tunis
Limassol
Casablanca
Cairo
China
Hong Kong
Riyadh
Dubai
Jeddah
Distribution centers
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Main events and factors in Q4 2008
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Main events and developments
New operations
• Completed geographical coverage of Baltic and Balkan states, including
• New subsidiary in Latvia
• Acquisition of local distributor Megatrend d.o.o. in Bosnia & Herzegovina (80% subsidiary)
• Greenfield operations in Italy, Turkey and Kazakhstan
• Investment in new warehouse in Dubai (UAE, Free Trade Zone) to support growing Middle East operations
Changes inside the Company
• Centralization of European logistics in Prague. Dutch distribution center has been shut down
• Cost-cutting program introduced in November 2008
• Actions to refine hedging policies in local subsidiaries
New distribution agreements
• More than 20 new distribution agreements, including:
• Western Digital
• Lenovo
• Microsoft
• DELL, Acer (in various markets)
• LG Electronics, Belkin
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Factors affecting financial results in 2008
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World’s financial crisis
• Credit and financial crisis that affected global markets, however EMEA markets have been hit extensively due to the foreign
investment outflow
• Dramatic decrease in demand following the recession across all markets the group operates
• Political and economic instability in Ukraine resulted in lower revenue
• Heavy depreciation of the CEE and Russian currencies against the US$ resulted in massive forex losses
Interest rate fluctuations
•
Recently, due to markets turbulance and the interbank rate increase, the cost of borrowing for the group was increased
(Serbia, Hungary, Romania, Russia, Ukraine)
• Several of the Group’s bankers have raised their spread (Romania, Slovakia, etc.)
Changes in demand
• Very good Q1 and Q2 results, especially due to combination of strong demand of both hardware and software
• In the second part of the year, the world’s financial crisis affect demand in some countries by:
• Less credit avalaibility
• Lower purchasing power of most of the countries
• Higher prices due to weakening local currencies
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Factors affecting financial results in Q4 2008
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Currency fluctuations
• Steep depreciation of local currencies against the US Dollar affected the Company’s business. Particularly strenghtening of
the U.S. Dollar against the Russian Ruble, Euro and other currencies resulted in a decrease in the Company’s revenues and
net profit, as reported in U.S. Dollars.
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Actions undertaken to mitigate the effects of the crisis
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Actions undertaken
The Company has taken appropriate actions to minimize the impact of the global financial crisis and currency volatility
on its financial results; It :
• Has undertaken significant cost-cutting actions in November 2008 and continues same in 2009, the results of which will be
visible from Q1 of 2009 (expected saving amounted to US$ 1.4 m for Q1 and US$ 1.6 m per quarter beginning from Q2),
besides savings on foreign exchange (FX)
• Shut down the Dutch distribution center and moved its operations to Prague. This will allow to save ca. US$ 1.4 m in 2009
• Has increased its U.S. Dollar denominated sales, to decrease its foreign exchange exposure (as it mainly purchases goods in
US Dollars and principally sells in local currencies)
• Improved both short term and long term hedging strategies by increasing loans, factoring and other hedging tools in local
subsidiaries
• Intensified its credit risk management to improve cash flow and mitigate its FX risk
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Financial results
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Financial results for Q4 2008
Highlights
1) 21.6% Q4 2008 to Q4 2007 revenues decrease
2) 42.2% Q4 2008 to Q4 2007 gross profit
decrease
3) In Q4 gross profit margin decreased to 4.1%
due to FX losses, compared to 5.5% in the
corresponding period of 2007
4) Net Loss of US$5.427 as opposed to Net Profit
of US$9.336 in the corresponding quarter of
2007
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Financial results for 2008
Commentary
Key values in 2005-2008 (in U.S.$ millions)
1) Despite the world’s financial crisis, revenues
were higher in 2008 than in 2007 by 7%
2) Gross profit generated increased by almost US$
10 million
3) Gross profit margin increased to 5.1% as
opposed to 4.9% for 2007
1400
4) Net Profit reached US$5.1 Million as opposed
to US$18.7 million in 2007
5) Operating and administration expenses affected
by the one time investments in new subsidiaries,
6) Seasonality effect dissapeared in H2 2008 due
to the crisis
1000
70
40
20
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Revenue breakdown by regions
Revenue breakdown by regions Q4’07 and Q4’08 (%)
1) Q4 2008 significantly weakened to Q4 2007 in F.S.U. countries due
to lower demand (ie in Ukraine) and FX losses
2) CEE Europe remained strong, despite the world’s financial crisis
(increased revenues in Slovakia, Czech Rep., Hungary etc)
3) Another good quarter in the MEA countries, which seems to be less
affected by the crisis and where the sales revenue is denominated in
U.S. Dollars
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Revenue breakdown by regions 2007 and 2008 (%)
1) Revenues from F.S.U. Countries decreased by 5% YoY .
2) Significant growth of revenues from CEE countries (Slovakia, Czech
Republic, Hungary)
3) Strong growth of revenues in the MEA countries, due to company
investments and broader customer reach
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Revenues - Top 10 countries
Top 10 countries in 2007 and 2008 (in U.S.$ thousands)
Pos.
Country
Sales 2007
Sales 2008
Change
(%)
Share
(%)
Prev.
position
Notes
1
Russia
397 738
429 896
+8,1
28,73
1 (0)
Especially with
H1 2008 results
2
Slovakia
132 499
164 442
+24,1
10,99
3 (+1)
3
Ukraine
222 005
149 605
-32,6
9,99
2 (-1)
4
U.A.E.
55 120
79 874
+44,9
5,34
7 (+3)
5
Poland
66 847
68 042
+1,8
4,55
4 (-1)
6
Czech Rep.
56 475
66 816
+18,3
4,47
6 (0)
7
Belarus
25 244
47 874
+89,7%
3,20
Out of
top 10
8
Romania
60 065
47 745
-20,5
3,20
5 (-3)
9
Netherlands
37 385
45 221
+20,97
3,02
9 (0)
10
Bulgaria
28 198
40 197
+42,6
2,69
Out of
top 10
Other
291 607
356 446
+13,4
23,82
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Germany out of
top 10
Croatia out of
top 10
Incl. 15,7m in
Turkey
Revenue breakdown by product categories
Highlights
Revenue breakdown by products 2007 and 2008 (US$ thousands)
1) Strong 121% growth of revenues
from laptops
2) Good 16.5% growth of sales of
software, and 15% growth on
accessories and multimedia
3) Stable revenues from CPUs in
2008, Q4 sales affected by lower
demand
4) HDDs sales revenues affected by
lower demand and increased
market share of A-brands
Rev. breakdown by products in Q4 ‘07 and Q4 ‘08 (US$ thou.)
5) About 40% growth of revenues
from peripherials,
6) 45% growth of sales revenues
from PC desktops
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Forthcoming plans
GOALS For 2009
• To manage costs efficiently
• To hedge against steep depreciation of the currencies
• To manage cash flow and improve operational efficiencies
• To benefit from 2008 investments (warehouse in Dubai, offices and subsidiaries in Bosnia & Herzegovina,
Latvia, Turkey, Kazakhstan and Italy)
• To continue to benefit from good sales growth in Middle East and Africa,
• To sign new distribution agreements and increase our product portfolio in some markets (i.e. Poland)
• To expand some of the existing distribution agreements (i.e. on software and laptops) for more countries
• To develop sales of own brands
• To gain more market share in traditional components business, taking over share from weaker competitors
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Further Information
Investor Relations ASBIS Group
Constantinos Tziamalis
Daniel Kordel
tel: +357 25 857 188
tel: +357 25 857 000
fax: +357 25 857 181
mob: +357 97 633 793
mail: [email protected]
mob (PL): +48 509 020 021
mail: [email protected]
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