Asbis feels impact of crisis on bottom line
Feels effects of economic crisis after seeing its 2008 profits eroded by $5.4 million loss during Q4
Components distributor Asbis has become the latest IT company to feel the effects of the economic crisis after seeing its 2008 profits eroded by a $5.4 million loss during the fourth quarter.
The EMEA emerging markets distribution specialist recorded a US$5.1m net profit for the year — significantly down on the $18.7 million it made the prior year — following lower demand and higher currency losses during the final quarter of 2008.
The downturn has already prompted Asbis to undertake a series of cost-cutting measures, including the centralisation of certain logistics centres and the introduction of an operational programme to better manage its working capital cycle. It hopes these moves will save it more than $7 million during the course of this year.
Despite the difficult conditions encountered towards the end of last year, Asbis still managed to post a 7% rise in 2008 group sales to almost $1.5 billion. The Middle East and Africa region contributed $169 million to that figure, up 50% year-on-year.
Asbis says its laptop distribution business more than doubled year-on-year, while sales of peripherals and software lines both provided solid revenue returns. CPU sales held firm as well, generating $400 million of the group’s total turnover.
“The second half of 2008, and especially Q4, was difficult for our company and the whole sector due to the world financial crisis and steep depreciation of local currencies against the US dollar, which is our reporting currency,” admitted Siarhei Kostevitch, CEO at Asbis.
“The uncertainty created by the crisis has severely affected demand, which in some countries was up to 50% lower than projected,” he added. “However, with extensive infrastructure across the EMEA region, we have a strong foundation going forward. We can partially offset lower demand in some countries with increased sales in other regions where we operate — especially in the Middle East and Africa, where the biggest growth is expected, but also in CEE countries like Slovakia and Belarus, where we noticed good growth during the difficult times of 2008.”
Asbis has vowed to continue its strategy of reducing dependence on the components business during 2009. Last year it signed 32 distribution agreements throughout EMEA, many of them with vendors such as Microsoft, Dell, Brightpoint and LG for the sale of finished products.