European distribution titan Esprinet has laid out its plans for the next three years, and pledged to add more than €1bn to its top line via organic growth in key target areas.
The Vimercate-based firm announced today that the board of directors has approved its 2016-2018 Strategic Plan, including financial projections and growth and investment initiatives. This year the distributor is expecting to post sales of €3.1bn, which would represent an increase of 15.2 per cent on the 2015 total of €2.69bn. Net profit is expected to come in at €24m, somewhat down on last year's €30.8m figure.
The plan is to drive annual revenue to €3.75bn by 2018, which would equate to a compound annual growth rate (CAGR) of 12 per cent. Net income is predicted to swell to €46m over that time frame, a CAGR of 16 per cent.
During 2016 the distributor has made two acquisitions: fellow Italian firm and datacentre specialist EDSLan; and Spanish outfit Vinzeo - a buyout that propelled Esprinet to become Spain's biggest distributor. The goal for the coming years is to "capitalise [on] its position as leader both in Italy and Spain and pursue initiatives oriented to enhance gross margins and stabilise SG&A (selling general and administrative) dynamics". Further M&A activity is possible, but not crucial.
"Geographic outreach shall be limited to those markets where the group is already active: Italy, Spain and Portugal," said the company. "Possible expansion is not a priority and should be evaluated only opportunistically, on a mid- to long-time horizon."
The key plans for the coming years are divided into three areas, the first of which is the traditional IT channel. The watchword for this segment is "improvement", with initiatives including the deployment of a new CRM system, the cultivation of "vertical alliances" in certain target areas, and pushing new and more value-focused solutions to major retailers.
The second area picked out by Esprinet is the volume consumer fulfilment segment, in which its key metric for the years ahead is "expansion". The goal is to increase productivity and scale in its device distribution business, in order to improve return on investment in what it acknowledges is a comparatively low-margin sector. But alongside this it also intends to grow its sales of more profitable technologies such as datacentre infrastructure, as well as security, cloud, software, big data, and hyperconverged infrastructure. To this end, the expertise it acquired via the buyouts of EDSLan and Vinzeo will be crucial, Esprinet claims.
The third area of focus picked out is the comparatively uncharted market of "consumer verticals", in which the distributor claims that its plans revolve around "real options". Esprinet admits that this sector carries both greater risks and bigger potential rewards.
"[There is] very high growth and value potential, typically in the consumer space (white goods, sport technology, IoT etc), and... significant possible returns on capital employed, with a higher risk of execution due to a relative lack of experience and knowledge... vis-a-vis other competitors."
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