Esprinet continues Spanish centralisation

by Stuart Wilson, Friday 14 November 2008

Esprinet, which is quoted on the Italian Stock Exchange, reported group sales down 4% year-on-year at US$2.08 billion for the first nine months of 2008

Esprinet has continued the centralisation of its Spanish operation according to the third quarter results statement from the Southern European distribution outfit. The process, which began in early 2008, has seen Esprinet shut down satellite warehouses in Spain, reduce headcount in the country by 100 and reassign some front and back-office functions from Bilbao to the company’s new centralised operation in Zaragoza.

Esprinet also plans to dispose of its real estate interests in Bilbao through a bidding process. While Esprinet has centralised much of its Spanish activity in Zaragoza, the company will maintain a significant commercial presence across the Basque region through its outbound sales force.

Esprinet, which is quoted on the Italian Stock Exchange, reported group sales down 4% year-on-year at US$2.08 billion for the first nine months of 2008. Consolidated pre-tax profits slipped 41% to US$27.9m with after-tax profits dipping 40% to US$17.1m.

Esprinet attributed the weaker results to the ‘poor performance of Spanish subsidiary Esprinet Iberica both on [the] sales and operating income side’. Overall group results for the third quarter did buck the downward trend in profits with net income jumping 41% to US$2.8m despite sales climbing just 3.8% year-on-year to US$626.6m.

Esprinet attributed the third quarter profits boost to strong performance from its Italian business, sales growth and cost control in Spain plus more efficient working capital management.

Esprinet also paid tribute to its IT and consumer electronics online retail arm Monclick, which has now reached a breakeven level three years after its launch. Comprel, the group’s microcomponents business-to-business wholesale arm fared less with pre-tax profits falling sharply.

For the first nine months of 2008, Esprinet’s Italian sales hit US$1.59 billion – 77% of the group’s total sales with Spanish operations contributing the remaining US$483.6m. Despite a bleak outlook for IT spending in the remainder of 2008, Esprinet remains confident it is in comparatively good shape.

According to the company, the Italian operation saw strong sales in October but has so far seen some weakening in November. Esprinet reckons that its Italian business has the strength to perform well in a soft demand environment by virtue of its, ‘competitive gap vis-à-vis the other distributors and despite the group’s strict discipline on credit conditions offered to customers’. Esprinet paints a similar picture in Spain with strong sales in October giving way to weakness in November.

Esprinet also indicated that vendors were showing their caring side as the tough economic conditions prevailed. The Esprinet financial statement read: “Further, some leading suppliers showed an unprecedented willingness to consider substantial contractual delay in payments which may combine to the realignment of inventory days to internal benchmarking so as to normalise working capital absorption.”