AB Group maintains double-digit growth rate
AB Group, the largest distributor of IT solution and consumer electronics in Poland and the CEE region, concluded the last four quarters with sales approaching the record level of 14 billion PLN and EBITDA exceeding 220 million PLN. Thanks to focusing on mature markets in Poland, Czechia and Slovakia, taking advantage of all sales channels and market segments, betting on new technologies and developing the highest efficiency in the industry, AB Group looks into the future development opportunities in the coming quarters with optimism.
Selected Financial Results:
|Four quarters (LTM)||Q1 2022 (Q3 FY21/22)|
|million PLN||y/y value change||million PLN||Change since Q1 2021||Change since Q1 2020|
|Gross profit on sales||532.6||+14%||131.0||+7%||+353%|
|Margin||3.9%||+0,2 pp||3.9%||-0.2 pp||+0.3 pp|
|Margin||1.6%||+0.3 pp||1.5%||-0.1 pp||+0.5 pp|
|Equity (period end)||1.131,3||+18%||1.131,3||+18%||+40%|
In the third quarter of the financial year 2021/2022 (January-March 2022), the AB Group recorded a revenue exceeding 3.3 billion PLN, which was higher than the previous year’s value by 11.5%. Compared to the same period of 2020, the revenue was 45% higher. Compared to previous periods, the difference grows in the wake of the long-term dynamic growth of the scale of AB Group’s business. Thanks to the stability of margins based on distribution contracts, the unwavering focus on the CEE market (Poland, Czechia, Slovakia – with no exposure to the Eastern markets), favourable sales structure and the highest operating efficiency in the industry (based on the SG&A sales ratio), the AB Group’s EBITDA in Q1 2022 has grown by 26% y/y to 51 million PLN, more than double what it was two years ago. This allowed the company to generate 30.7 million PLN in quarterly net profit, marking a growth of 21% year-on-year increase and a 153% growth over Q1 2020.
“The digital transformation is picking up pace, and if the previous two years have taught us anything, it is that handling a surging demand requires preparation in advance and large investments, which we have carried out in a timely manner. We think and act with long-term perspective in mind, observing caution that is inherent in our organisational culture. This allows us to grow our market share regardless of external conditions,” highlights Andrzej Przybyło, President of the Management Board of AB S.A.
“We are a pioneer and leader in new technologies, including e-commerce and cloud technologies. In operations, we use machine learning and process automation, among numerous other solutions. This increases our market potential and efficiency. At the same time, we operate in all channels, we have a diversified client base and the broadest offering on the market. As a result, with the right investments, we are prepared for fluctuations in demand, and in addition to the consumer segment, we are exposed to the quickly growing segment of digitalisation of companies and public administration, tenders, as well as purchases funded by large national and EU grants. These days, our actions are guided by a realistic goal – to keep up the high growth dynamics in the long term,” Andrzej Przybyło added.
As of the end of March 2022, the value of AB Group’s equity exceeded 1.1 billion PLN and the total value of its inventory grew to over 1.8 billion PLN. This is particularly crucial given the context of broken supply chains and lockdowns in China that have delayed many deliveries – mayor cities hosting electronics and component factories have been locked down, ports became congested and the rail transport from China to Europe via Ukraine has been stopped. Due to its distribution contracts , AB Group has a guaranteed margin on sales, and its inventories enable it to fulfil orders by its clients and customers.
“Major market challenges require robust preparation on the financial side of things as well, which is why we have been conservative when it comes to our balance sheet, so as to ensure a high level of safety regardless of circumstances to be able to respond effectively to market opportunities as they arise. We maintain financial indicators at very safe levels, for example the net debt to EBITDA LTM is below 1.4,” says Grzegorz Ochędzan, Member of the Management Board of AB S.A. for Financial Affairs
“At the same time, we see that the qualitative evolution from an IT equipment distributor to a technology company and a distributor for the new economy era has not yet been accounted for by the capital market. We believe that our stock is highly undervalued, as confirmed by stock analysts’ recommendations. That is why we are carrying out a share buyback,” adds AB Group’s CFO.
Apart from the buyback, AB S.A. shareholders directly participate in the company’s business success thanks to the dividend which was paid out in December in the amount of 1 PLN gross per share. In total, this might have amounted to nearly 33 million PLN paid out to shareholders.
AB Group conducts numerous initiatives in the ESG area. In addition to environmental and corporate governance issues, the company has actively joined the fight against the COVID-19 pandemic with a nationwide #AByrazem campaign, which resulted in nearly a thousand pieces of various equipment, including ventilators, sent out to those in need. On the other hand, the AB Competence Centre has been offering free training courses, promoting access to technological knowledge. These days, in the wake of the hostilities in Ukraine, it is also responding in many ways to the needs of the Ukrainian community with the #AByrazem for Ukraine campaign. In addition to in-kind and financial aid, Alsen, part of the AB Group, has been collecting used laptops, which after refurbishing are donated to Ukrainian children through the Ministry of National Education.