Logicom takes cautious approach with resellers

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By  Published  December 8, 2006

Cypriot distributor Log- icom has admitted that it is taking a more cautious approach in dealing with resellers in the Middle East, after accruing bad debt of US$6.1million from three Dubai-based resellers in June.

The distributor recently enlisted the services of insurance provider Atradius to cover it for bad debt in the future.

Demos Anastassiou, group planning and development manager at Logicom, told IT Weekly sister title Channel Middle East: “Since the incident with the three resellers in Dubai, we have been paying more attention to the credit that we offer and have adopted an all-round more careful approach when dealing with resellers in the region. We have also taken out an insurance contract with Atradius, as it is one of the biggest insurance providers operating in the region.”

The recent agreement covers possible losses that may result from the collections from customers in all countries where the company is present. The annual premiums for the credit insurance are estimated to be between US$460,000 and US$530,000.

Channel Middle East revealed in August that Logicom faced bad debts from three resellers — one of which is believed to be Fortex-MID, although the reseller is since understood to have agreed a payment plan to return its outstanding debt to Logicom.

“We are receiving regular payments from one of the resellers that had amassed bad debt and we’re confident that this particular reseller will honour its debt. However, we are taking legal action against the other two resellers from Dubai,” confirmed Anastassiou.

This cautious approach is already paying dividends for Logicom if its third quarter results are anything to go by.

The company’s profits incre- ased by 81% to US$5.9million year-on-year, meaning the distributor has already passed the US$3.6million total profit it made for the whole of 2005.

Turnover reached almost US$250million, an increase of 35%, with over half of the figure being generated in the region.

“There has been a vast improvement in profit due to the larger profit margins that we are seeing on our products, especially in the UAE, and the tighter control we have on credit terms,” said Anastassiou.

“52% of this revenue comes from our operations in the Middle East, namely from the UAE, Jordan and Lebanon. We also service other Middle East markets such as Kuwait, Qatar and Bahrain from Dubai.”

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