18 May, 2016
ELKO Group Interim Report January–March 2016
The year has begun successfully, ELKO Group shows a stable growth in the first quarter, reaching planned sales and gross profit figures.
According to the unaudited consolidated financial results for January-March 2016, ELKO Group has achieved revenue growth by 18% year-on-year, showing 252 million USD (229 million EUR) revenues compared to 213 million USD (189 million EUR) in 2015. Positive growth has been driven by ELKO management’s actions taken to strengthen ELKO positions in the market as well as weak comparison base in 2015.
CIS region’s economy remains weakened with down-pressure on IT industry. Nevertheless, ELKO Group managed to increase sales up to 126 million USD (114 million EUR), which is by 7% more than year ago. A significant increase in terms of volume was observed on smartphones’ market. Unlike previous years, the unfavourable economic situation influenced demand rise for budget-class goods. Distinct upward trend is observed for wearable devices. It is expected that this will be one of the fastest growing segments in the coming years.
Euro currency strengthening against US dollar has contributed to slight increase of Baltic IT market, where ELKO Group was able to generated 26 million USD (23 million EUR) revenues, which corresponds to about 9% more than in 2015. Good sales results perform several niches of interest or niche products in both household and business customer segments, which ELKO has been able to successfully address.
ELKO Group continues to show exceptional growth rates in Central and Eastern Europe (CEE) region, with ELKO offices in Romania, Slovakia, Slovenia and the Czech Republic, and co-representation in other region’s countries. Purposive sales activities and grateful overall region's economic development ensured sales rise by 40% for the first quarter, reaching 100 million USD (91 million EUR).
Accurate planning, risk monitoring and management process improvement and compliance is reflected in gross profit figures. Reaching 12 million USD (11 million EUR) in gross profit and 4.8% gross margin, ELKO has exhibited slightly better profitability indicators than planned.
The Group’s capacity and competence during the last quarter has been greatly fortified by attracting new knowledgeable and professional employees. Consequently, the administrative and sales costs increased accordingly by about 0.6 million USD (0.6 million EUR), which is in a line with the budget.
During the first months of the year, the demand for IT products and services developed according to our expectations. We continue to capitalise successfully on the rapid growth of IT market in Central and Eastern Europe. IT industry development trends are negative in most of CIS region countries, despite of that, ELKO were able to rise sales volumes. I would like to point out ELKO ability to stay profitable also in economically less favourable market situation.ELKO Group CEO