Q2 2023 in the AB Group: higher net profit and operating margin and strong decline in financial debt

The largest distributor of IT and consumer electronics in Poland and the CEE region is strengthening its market leadership position, recording consecutive EBITDA increases, reducing debt year-on-year, and is poised to further increases the scale of its operations in an environment with favorable market prospects.

The AB Group recorded more than PLN 3 billion in quarterly sales in April-June 2023, as it did a year ago. At the same time, it continued the trend of increasing the generated operating margin and EBITDA, thanks to which its quarterly EBITDA increased to PLN 54.5 million and its operating profit exceeded PLN 48 million. In the last four quarters, the AB Group generated more than PLN 295 million in EBITDA (+28% year-on-year), PLN 270 million in operating profit (+27% year-on-year) and PLN 158 million in net profit (+5% year-on-year) with PLN 15.2 billion in revenue (PLN +1.2 billion, +8% year-on-year).

– Once again, we see the positive effects of the AB Group’s long-term, safe growth strategy. Compared to the situation a year ago, we reduced net debt by more than 25% year-on-year, or by nearly PLN 69 million, to PLN 203.7 million. We did this despite paying more than PLN 20 million in dividends in January and consistently executing an PLN 8.4 million buyback in the period of July 2022 – June 2023. Our net debt to EBITDA ratio fell below 0.7, and at the same time, despite the strong increase in interest rates and financing costs, we were able to increase our net profit – Grzegorz Ochędzan, the CFO of AB S.A., said.

Although the past quarter was the fourth quarter of the 2022/2023 financial year, the AB Group’s upcoming annual report will still cover the current quarter due to a change in the financial year period: in accordance with the General Meeting’s decision, the current financial year will end at the end of September, and subsequent financial years will cover the periods from October 1 to September 30.
A look at opportunities for further growth and generation of shareholder value confirms that the market outlook is optimistic.

– We are pursuing a strategy of long-term growth in scale of operations and financial performance based on multi-directional diversification. We evaluate the outlooks positively due to strong trends related to the digital transformation of societies, companies, and government administration, which are further supported by government and EU programs. We have the broadest product portfolio and continue to expand it – most recently with Check Point cyber security solutions, Mobotix video surveillance solutions, network solutions (including industrial), and various types of sensors – Teltonika Networks and the Xiaomi and Tecno brands in the telecommunication segment. Also, a big event for the Polish IT market in the third quarter is the tender for laptops for schoolchildren – Andrzej Przybyło, the CEO of AB S.A., pointed out.

Recently, analysts at Ipopema Securities and the BOŚ Brokerage maintained their “buy” recommendations and raised their target prices for AB S.A. shares to PLN 83.9 and PLN 82.6, respectively, implying a potential increase by about 40%.

The AB Group’s quarterly online conference call will begin at 10:30 a.m. on Wednesday, August 23 – the details and the access link can be found at https://en.ab.pl/dla-inwestorow/