Magirus margins on the up

Value-added distributor Magirus has unveiled strong financial results for its fiscal year ending March 2005. Group sales climbed 6.3% year-on-year to US$690m while operating profits jumped 17.7% to US$19.8m as Magirus boosted its margins for the third consecutive year.

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By  Stuart Wilson Published  July 6, 2005

Value-added distributor Magirus has unveiled strong financial results for its fiscal year ending March 2005. Group sales across Europe and the Middle East climbed 6.3% year-on-year to US$690m while operating profits jumped 17.7% to US$19.8m as Magirus boosted its margins for the third consecutive year. Magirus, which operates across Europe and the Middle East, is a focused value-added distributor representing a bevy of major vendors including HP, IBM, EMC and StorageTek. The distributor, which operates in the Middle East through a joint venture vehicle called A’Ayan Magirus, now has offices in the UAE, Kuwait and Saudi Arabia. According to Vimal Kocher, general manager finance and operations at A’Ayan Magirus, Middle East sales soared 72% in US dollar terms and 43% in euro terms during the 2004-2005 fiscal year. The strong growth recorded in the Middle East helped offset slight sales declines in both Germany and Austria. At a group level, Magirus’ software business sales grew 44.5% to US$124.2m driven by healthy demand for IBM middleware products, a doubling of HP OpenView sales and the dynamic growth of VMware. Magirus also made headway in its role as a distributor of third-party service offerings with sales climbing 39.2% to US$42.2m for the division. Magirus’ own technical support and consulting services unit performed even better recording 65.4% year-on-year growth to hit US$10.3m. Hardware sales continue to contribute the lion’s share of Magirus’ group sales. Revenues derived from server and storage system sales of EMC, HP, IBM and StorageTek slipped 2.6% to US$506.8m. Magirus claims that its focus on distributing solutions that combine software, services and hardware allowed it to drive sales and also boost gross margins. Magirus’ focus on two specific solution areas — server and storage virtualisation and information lifecycle management — helped compensate for the softer performance from the core hardware distribution business according to the company. Magirus’ results offer an insight into the operating margins that distributors work on in Europe and the Middle East. For its last fiscal year, Magirus’ operating margin was 2.87%, highlighting once again the wafer-thin margins that exist in IT distribution — even for those companies playing in the value-add arena.

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