The AB Group counts on a further increase in margins in the coming periods and on a growing demand
Warsaw, 08.03.2021 (ISBnews) – AB Group sees potential for further margin growth in the coming periods, company representatives told ISBnews. AB looks forward to a further increase in demand and accelerated digitisation of entire economies.
„Our trading margin after operating costs, or profitability on sales, increased in Q4 2020 up to 1.6% versus 1.1% a year earlier. In terms of the EBITDA margin, that was an increase to 1.7% from 1.2%. With appropriate cost optimisation on our part, we still see potential to increase those values in future periods,” – Board member and CFO Grzegorz Ochędzan told ISBnews.
„Certain solutions that we have implemented in Poland have not yet been implemented in the Czech Republic or Slovakia and vice versa. Hence, we believe that with growing sales and room to improve operational processes, we still have some space to increase margins at lower levels even with a stable trading margin,” – CEO Andrzej Przybyło added.
According to the CEO, AB Group’s sales results would have been higher in recent quarters, but the company had to face, among others, limited availability of certain goods.
„If we look at the main destinations of electronics imports, countries such as China, South Korea or Japan, it is worth noting that in many cases factories could not produce at full capacity due to turbulence in the availability of components; there were also issues related to the availability of containers for European destinations. Working even at full capacity, it is difficult to quickly catch up with order fulfilment in the short term, especially as current demand is strong. Let us remember that the pandemic caused a surge in demand and accelerated the digitalisation of entire economies. Demand, in general, is supported by many factors, so we are optimistic about the future,” Przybyło told ISBnews.
According to him, current market forecasts, regarding the growth of the e-commerce market, for example, are based on stable data but from before the pandemic.
„What we see now presents a slightly different picture. In my view, there will be a rapid qualitative change due to the further digitisation of many activities and hence my expectation for much higher growth in this segment,” the CEO added.
In his opinion, the long-term investments made in the company are now yielding positive results.
„We are becoming an increasingly technological company that not only sells specific products or components, but itself uses new technologies in its operations and even develops its own software to optimise operations, individual processes and implements them successfully. We use business intelligence class systems or machine learning to optimise our product offering to our customers and to maximise the efficiency of our sales department. This is already producing tangible results, and we see the further potential here. The market for software subscription sales, for example, also has huge potential. The revolution in a multi-billion dollar market is already happening, and with our cloud platforms already number 1 in the region, we have ambitions to carve out a large slice of the new demand from this growing pie. The market is now growing rapidly, with our cloud sales up 58% in 2020, but this is only the beginning. The best is yet to come”, believes the CEO.
According to Przybyło, the current valuation of AB Group’s shares in confrontation with the basic stock market indices has stopped at the level of several years ago.
„Meanwhile, we have reached PLN 12 billion in sales, our equity has already approached PLN 1 billion over that time. This not only shows how much the company has changed – it has also prepared us for the dynamic changes in the IT market that we are seeing. It is AB that has all the market advantages not only to maintain its number 1 position for current market demand, but also to capture a very large share of the new demand resulting from the acceleration of the digitalisation of life, the catching up of lagging infrastructure or resulting from the revolution in the way software is distributed,” concluded the CEO.
The AB Group is one of the largest entities involved in distribution activities in the IT sector, operating in the Central European region of Poland, the Czech Republic, and Slovakia. AB S.A. has been listed on the main floor of the Warsaw Stock Exchange since 2006. In the 2019/2020 financial year (July 2019 – June 2020), it had PLN 10.2 billion in consolidated revenues.
author: Marek Knitter