AB Group continues to grow thanks to a unique business model
AB Group, the largest distributor of IT solutions and consumer electronics in Poland and the CEE region, has concluded yet another successful quarter. Even in times of demanding market conditions, the Group generates stable turnover, solid profits and cash surplus, has an exemplary balance sheet structure and safe financial indicators. In the first quarter of FY2018/19 (July–September,) AB Group recorded revenues of EUR 437.1 million, which is a slight improvement compared to the results from the previous year. This enabled the Group to generate an EBITDA result of EUR 4.8 million and a net profit of EUR 2.7 million. Equity grew to more than EUR 173 million, exceeding the values seen on competitors’ balance sheets several times over. This manifestation of a responsible strategy led to a situation where, at the end of September this year, financial debt accounted for only 30% of equity, and the net debt to EBITDA ratio was at a safe 2.1x. Thanks to the exemplary quality of financial settlements, AB Group was also distinguished by financial institutions – the list of accolades includes the Golden Payer title awarded by Euler Hermes for the highest payment morality. High and stable liquidity ratios go hand in hand with the lowest SG&A ratio (only 2.7%) in the industry, which shows the efficiency of the distributor’s operations.
“The business model of AB Group differs from its competitors. That is why we are a safe bet and why we focus on long-term business relationships.Our safe business model enables us to build shareholder value not only through current cash flow surpluses, but also through the best starting position for the future,” highlights Andrzej Przybyło, Chairman of the Management Board of AB S.A.
The stability, transparency and exemplary distribution model in the process of delivering products to the end customer, supported by successes of the AB Group in a long-term perspective make it the first choice for both vendors and resellers. This fact is confirmed by independent research (including a resounding success in Context’s reseller plebiscite), as well as the Group’s business achievements. AB Group has the largest customer base in the region, numbering over 16,000 companies. It is also a leading partner for global technology companies. The Group also regularly expands its product portfolio, which currently encompasses nearly 100,000 SKUs, which – what is crucial in this context – are available in stock. It is worth noting that Oppo’s representative office in Poland signed a distribution agreement with AB S.A., for the distribution of the company’s products in Poland.
“Oppo is the fourth largest smartphone vendor in the world, with more than 121 million phones sold in 2017.Since June this year, it has been offering its products in the Netherlands, Spain, Italy and France. We offer models such as Oppo Find X, which had its European première in the Louvre in Paris. Oppo Find X stands out due to its unique design, characterised by 93.8% screen-to-body ratio, which set new records among mobile phones worldwide. Additionally, it features the Super VOOC charging function (enabling charging the whole battery in just 35 minutes) and sliding cameras – two at the back and one at the front,” Zbigniew Mądry, Member of the Management Board and Commercial Director at AB S.A.
Oppo products are expected to be introduced to the Polish market is the first half of 2019. Meanwhile, in the last quarter, the product portfolio of AB Group included a number of noteworthy product areas, including cloud-based software distribution (+94% y/y), digital signage (+46% y/y) and gaming (+52% y/y.) The VAD segment is also growing at a strong double-digit rate (+22% y/y in Poland, +31% y/y in Czechia).
Franchise chains constitute an important part of the growth strategy. In this area, AB Group implements a unique model based on the synergy of benefits achieved by the supplier, AB’s clients and AB Group itself. Thanks to these benefits, individual chains are recording visible sales growth. For example, the Digimax chain (telco) has recorded a turnover growth of 40% y/y. The shop-in-shop formula with an offer of gaming products – X-Play – is also growing dynamically, recording a 29% growth in sales y/y. Franchise chains constitute a loyal sales channel for the distributor. They are a part of the sales channel for small and medium enterprise sector (SME), which comprises more than ten thousand business partners served by AB Group. The growth of AB Group was based on serving customers through a broad channel of small and medium-sized businesses, and the group remains the leader in serving this sales channel in the CEE region. Q3 2018 was another period of sales growth – revenues increased by 12% year on year.
The e-commerce area is crucial for the AB Group, as it shows the next stages of the ongoing revolution, bringing about the growing importance of digital sales channels. In this area, AB Group records dynamics that are many times higher than the broad market, generating sales in an automatic manner to a large extent automatically, providing clients with the Allegro module, as well as professional presentations of products in the 360-degree format.