AB Group after Q1 2019: solid financial results, growing importance of new technologies

AB Group, the largest IT and consumer electronics distributor in Poland and the CEE region, listed on the WSE, continues its growth trend. In the first quarter of 2019 (Q3 of the financial year 2018/2019), consolidated revenues increased by 4% year-on-year, reaching nearly 1.9 billion PLN. In the entire 2018, it was over 8.4 billion PLN, and during the three first quarters of the current financial year – 6.7 billion PLN.

This is the result of consistent implementation of a long-term development strategy, in which we attach special importance to long-term thinking and providing the best offer and service to both our clients – and there are over 16,000 – as well as our suppliers. We use the best e-commerce solutions and we strive to ensure that our activities are characterized by efficiency and effectiveness – comments Andrzej Przybyło, President of the Management Board of AB S.A.
We have won many awards, such as Innovators „Wprost” or – literally in recent days – honoring the title of the 30th Anniversary of „Gazeta Wyborcza”. In Q1 alone, we received Distributor of the Year awards from vendors: Dell EMC, HP Enterprise and Lenovo. We especially appreciate the awards granted directly by resellers, we can boast receiving the Distributor of the Year title every year – adds Andrzej Przybyło, President of the Management Board of AB S.A.
In the first three months of 2019, the increase in demand for smartphones, the increase in cloud software sales, the growth of digital signage markets, SSDs and smart home solutions deserve special attention. The AB Group uses market development and the introduction of new, innovative devices and solutions by manufacturers. Strong geographical diversification also pays off – sales are based on three main markets: Poland, the Czech Republic and Slovakia, as well as on servicing entities in over 30 countries.
We have recorded an increase in profits from foreign markets, while the domestic market has remained strongly competitive for at least two years. However, history shows that local margins are recovering naturally after a period of decline. We expect the likely trigger for this process to be market consolidation, one competitor taking over another. Rationally operating companies in the world know that a price war is the last thing to strive for – points out President Przybyło.

However, already now, due to business diversification and a strong market position with numerous permanent competitive advantages, we have achieved solid financial results in the last quarter, similarly as in previous periods – emphasizes Grzegorz Ochędzan, Member of the Management Board for Finance at AB S.A.

In the first quarter of 2019, the AB Group recorded 20.2 million PLN EBITDA and 10.3 million PLN net profits. Equity, creating space for future growth, increased to a record high of over 771 million PLN. Financial debt at the end of March was at the level of 251 million PLN (a decrease by over 100 million PLN, -28% yoy) and constituted only 33% of equity, and the net debt to EBITDA ratio dropped to 2.4. Safe and stable liquidity ratios go hand in hand with the lowest SG&A ratio in the industry (below 3%), reflecting the highest efficiency of the AB Group as a distributor. It should also be noted that operating cash flow surged – from minus 2.0 million PLN a year ago to 43.7 million PLN plus in Q1 2019.

AB Group is also a leader in sales automation and logistics. In response to the growing usage of smartphones and tablets, AB is developing its own mobile version of its shopping platform AB Online and providing fast online payments (number of customers using this service in Q1 + 59% yoy), also increasing the scale of transaction automation. When it comes to servicing online stores, it is worth paying attention to delivery methods such as drop shipping and 24-hour delivery cycles, which is standard in the AB Group. Together with the widest range of products available immediately, the group of large companies from the e-tail industry that are sourcing directly in the AB Group is systematically growing. Subscription sales of cloud software are also growing dynamically (+ 72% year on year in Q1), and the AB CSP platform is perfectly in sync and on time when it comes to global trends changing the standard software distribution model, expanding the area of IT distribution activities beyond hardware. In the past quarter, AB Group also increased sales in non-IT areas, such as RTV/AGD and toys by double-digits.