Dzień dobry. Panowie i panie. Glad to be here. Thank you very much for coming to be with us today. I see good interest to our business development, and thank you for being with us and trusting in ASBIS. In our agenda today, we give a short major corporate events update of last quarter and overall 2023. Financial results of Q4 and 2023 as well. Outlook of 2024. If you have time and interest, I'm very open to show what's inside of a kitchen, what is new ASBIS now and what we are developing. We are very open as usual to questions and answers. Key corporate events of last quarter.
We completed exit from Russia. It was second and last subsidiary. We completed in October. During course of November, the major events were that we got distribution agreements through our new setup in South Africa. Not only Seagate and Mangoluason, but we also managed to get a distribution contract with Apple in South Africa, and we are preparing now start of operations together with the vendor. We also acquired two B&O stores in South Africa. In December, we were comfortable to pay interim dividends, $0.20 per share. I hope you like it. I like it. In a quarter from October to December, we had growth every month.
Overall growth for year was about 14%, which is quite strong growth, understanding in what environment we operate in CIS and Ukraine and not only. Some key numbers of 2023 by our focus areas. Our IT information and communication technologies distribution, we delivered growth and we serve for about 16,000 resellers through our subsidiaries in 34 countries. In solutions to enterprise business, again, our business unit or B2B part of ASBIS, it's a reselling business unit which address directly to business and customers. They serve 19,000 small, medium and large-size enterprises directly. It's in-house, and very a very strong strength or very serious strengths.
In robotics, we continue to focus to develop solutions in five categories. I will give you a bit more flavor later on. Consumer distribution serves more than 7,000 or sells through more than 7,000 stores, plus e-commerce. Our retail business unit now consists of 42 doors, 36 Apple premium reseller and mono brand, and six B&O stores already. Last year it show quite good strength and development. Trade-in business unit, Breezy, managed to be number one in CIS already. That's a great part of our results as well. I can see that. To serve the sustainable economy. In portfolio of our corporate venture investment, we have 15 startups.
Some of them, as you know, are originated in-house, but multiple we invested too. It's already quite significant portfolio. Basically with this, we also not only deliver result now, but we preparing and developing our future. Which we see not just in the distribution of third-party products, as we declared to you. Very important portion of development last year, it's upgrades of our distribution centers. We managed last year to upgrade Czech Republic. We upgraded very seriously and moved in already distribution center in Emirates. We opened a completely new one in South Africa. Basically, from distribution perspective, this upgrade allow us to support the growth.
Prague distribution center is great not only for Central and Eastern Europe and CIS, but also for Northwest Africa. Dubai really can support our growth in Gulf and Northeast Africa. South Africa is part of our development strategy, business development strategy and expansion to Africa. South Africa is great base to address not only market of South Africa itself and not only union of the countries around it, but all sub-Saharan. Because there are many interesting markets. Yes, they're complicated. Yes, they're emerging. As you know, we as we through our life, we are dealing with emerging and complicated markets.
In portfolio of our private labels, what is our brands, and we focus on computing, on robotics, on electronics, gaming, med tech, biotech, energy, and sustainability. We had during course of year several new investments. We did, yeah, I did my Christmas shopping as well end of the year, so we bought few extra companies. Constantinos Tziamalis, now it's your part.
Yes.
I'll be your clicker.
You'll be my clicker. Thank you very much, everyone. Thank you for being here, and it is a great pleasure for seeing you. I repeat, thank you for being here. Great pleasure to see you all. A lot of investors were looking to see the chairman and the CEO. Here he is. He still exists with the company. He didn't vanish. Well, it's for us a very good opportunity to meet with all of you and feel free to ask any questions you might have and stop us at any point in time. I will start from what has happened and what was the story behind the one-off events affecting our results in quarter four.
Actually affecting our results, this happened in January, but we had to report it in quarter four. We had to make and close the books for 2023. We made and signed an agreement in October and we sold off the last operation we had in Russia. I want to remind us all that when the war started exactly two years ago, the group had more than $120 million of assets in Russia. It used to be our biggest market. By assets, I mean inventories, receivables, and not only equity. We managed through very hard work, but very also through consistency to export the majority of the assets from the country. In October, we felt that we.
It was a good opportunity for us to completely quit and leave the market, having found a buyer to undertake the remaining of the assets. Everything was looking fine until January when we found out that the regime, when they registered the agreement, the regime decided to confiscate all assets of the buyer, given that they believed they were helping an unfriendly country, a friendly company from an unfriendly country to get rid of to export cash out of the country. Therefore, they blocked everything, thus the inability of the buyer to pay the group back the amounts we agreed.
Now, we knew that we would have the so-called reclassification of foreign exchange, which was a non-cash item, and we expected to have it, and it wouldn't have because it didn't really have any impact on our cash flows or any impact on reserves on our equity. The majority of the real losses came from the impairment on the provisions we had to undertake for approximately $13.5 million due to what I have just described before, and due to the unforeseen actions of confiscating the assets by the regime. Other than this, with this out of the equation, the group has managed to deliver a net profit for the year of $78 million, which is the best result ever for the group.
Despite all this, and having seen how the company performed, we feel very satisfied with the result. It is what we have expected. Unfortunate events happen, and they happen for a reason. Finally, we are totally out of Russia, and we look forward to a much brighter future. Touching the quarter, it was a very good quarter, yeah, for the group, delivering a net income of $27.1 million, sustaining a margin above 8%, which is becoming a challenge, but the group manages it. Revenues growing by 50 or 14%, and the growth at all levels and at all lines of the income statement.
Pause, please.
We cannot really touch the EBIT and the net income given that everything has sat in this quarter and have affected significantly the numbers. I repeat that what we consider as a result of quarter four is $27 million, not $2.1 million. This again will be following us. However, our reliability and our consistency in reporting I think should prevail going forward. Growth rates across all key countries we operate with Kazakhstan and Ukraine leading the way. Allow me to touch and mention the result which make us very happy, and this is Poland, how fast Poland is growing.
You asked me a couple of quarters ago what the plan is for Poland. I told you top five. I think they are very close in achieving it, and it is quite a very good result from a very good team we have in the country. Central Eastern Europe is the region that drove the growth rates of quarter four with 36% year-on-year growth. Again, what I said about Poland indicates what has happened together with Czech Republic. They were the fastest-growing markets of ours. Obviously, Slovakia also has always been extremely strong for the group.
Western Europe also driving ahead with a 19% growth with what we have declared already and what the opportunities are for the group, given the consolidation happening, with a number of vendors giving us the opportunity to sell more and more products into Western European countries. In product lines, smartphones remained the number one top seller for our company. However, the computer components like CPUs and the server blocks and the SSDs are driving again higher, not because the market is increasing, but because the group is able to undertake significant market share from other distributors. This happens because suppliers, in their decision to consolidate the market, one of the preferred distributors is ASBIS in all territories we operate.
We saw major vendors of ours cutting down distributors and keeping ASBIS as either the one or one of the distributors in the country. We believe that we have a very strong position with the majority of our vendors, and we are in a position to gain from competition going forward. The gross profit margin of ours stabilized above 8%. It is a story that we have been discussing for many, many quarters now, whether the margins are sustainable at these levels. What we can see and what we are striving forward is to undertake all these actions, all these investments to make the gross profit margins remain at these high levels.
It was very difficult for us to bring the margin at this level. It's even more challenging to keep it. Like I said, the group is undertaking all these measures, undertaking all these investments to make it happen. Yeah, the above 8% is our constant target, but we see how it will go and whether this will happen going forward. At least in the long run, we believe we are on the right track to achieve higher margins. The SG&A costs, the investments obviously come with a cost, and we all know that we have been growing in terms of cost together with our profitability, obviously. Worth mentioning that in quarter four 2023, there is $3 million selling expenses which relate to a specific provision in Russia.
Other than this, our year-on-year employment has grew significantly due to, like, I said before, the amount of investments we undertook. The amount of projects we are engaging into is significant, and the quality as well as the quantity of employees is growing, and growing in terms of average employee cost. Because it's one thing hiring people in warehouse, it's another thing hiring robotics developers. We're talking about a completely different skill set and a completely different, obviously, salary packaging. Full year results, I said it, we repeat it. $78 million reached the total amounts without the one-off events. $78 million, which was in our range of forecast. The forecast, which was considered by a lot very challenging at the early days of last year.
It was a forecast we gave because we felt confident and because we felt strong of delivering, and here it is delivered. We believe that the forecasts are there to be met and not just to be given out to the market. This is what we plan to do also this year, sometime in spring. We are currently discussing and reviewing all the ingredients around the forecast. We expect to give another forecast for the year 2024, sometime in spring. The cash engaged in the working capital, I mean, the favorite analyst of the group was asking whether we will make the positive cash from operating activities. The answer is there.
The group managed to turn it around completely as it was expected, because we all knew why we faced some challenges at the beginning of last year, because of the very big project we undertook with Apple. We expected that in quarter four, it would have been positive, and here it is that the group has managed to almost reach $102 million improvement, making the company positive from operating activities, but also having a very strong cash on its balance sheet. Indebtedness, we believe that we are in a very, very good place with our gearing, with our leverage. Excluding the factoring advances end of the year, we almost had zero debt as a company.
With the factoring advances, which we do not consider real debt since it backed out with receivables, it's almost nothing. We believe that the group has all these financial facilities, but also the headroom to be continuing its growth story healthily. I will move back to Siarhei now, the floor, so he will give us a bit more flavor of what we expect to see for 2024, and we are ready to take any questions you might have.
Thank you, Consta. 2024 Q1 looks promising. We do not expect serious growth, but it will be growth, and it's come from our geographies in CIS, from Middle East, here from Central and Eastern Europe, Poland so demonstrates also tremendous growth year-on-year, and from product lines as well. We have more product lines to address, but we need time to phase them in.
Mm-hmm.
That's for Q1, it's single-digit growth, but increase we expect from second half. Outlook by different perspectives, products. Okay, Apple NPI was quite strong. Still strong demand on the markets for Apple products, and it's, yeah, biggest vendor of ours. We have, from last year, much stronger emphasis on private labels of ours, upgraded and renewed management, and we want private labels to grow much faster and to be bigger contributor to group results. Robotics solutions, yeah, we have sales, but this year we don't see it to be super big or a very serious contributor to revenue, but it will grow.
Sustainable products or second life products from Breezy, that's where we expect also serious growth. Data center solutions and data center products, as you know, we do, and servers and storage and networking, they're strong contributors and multinational branded and from building blocks, what we have. From markets perspective, we continue to focus on CIS, but of course, with absence of Russia and Belarus. As you know, we relocated lots of competent resources to other CIS countries. We call it F5 or F6. It's focused six countries which already substitute loss of business in Belarus and partially in Russia, and they're growing quite significantly.
Gulf area, also serious development in terms of sales, where we don't need much of infrastructure development. We did it last year. Africa, South Africa, and not only, we already. Our major focus this year in Africa will be South Africa itself. We want to make good base and foundation to expand from there to Sub-Saharan. We have already sales force there. We already having orders. It's not new. We already know the markets. We know the customers. We deal with the risks. We have this experience. Central and Eastern Europe, okay, we have dependence in Slovakia, for example, on government spending. It was great last year. We'll see how it go.
In multiple countries, of course, it will be impact of elections, but we don't see that it should impact our business significantly due to diversification, what we have on the outside markets and product lines. From clients' standpoint and customer base of ours, I gave you picture that we are no longer just distributor addressing goods through resellers or through retailers. We have different business units. Our retail business unit, B2B reselling business units addressing business, I mean, B2B business and customers direct from small to large enterprises, scalable with support of ASBIS, of course. Consumers through our retail business unit and through distribution also significant.
Basically, we have much stronger touch than I would say few years, couple of three, four years ago with end customers, rather than being just addressing to resellers in the past. It gives, from my perspective, it gives good value and good opportunity to the business. Risks. We all know unstable geopolitical conditions we are dealing already for couple of years. We don't see serious improvements. In fact, there are more now in Asia and Middle East. We have to take it into consideration, but in this environment, we monitor instantly and we mitigate our risks. As a result also what we see it's much softer consumer appetite on the spending, not only IT, but consumer electronics in general.
This is environment we are again dealing with, meaning if we don't do something to support something new additional, then we have risk that the business could be flat. Supply chain disruptions continue. Recently, this Yemen shipments from China, again and again, not only COVID. As you remember COVID, we passed quite well with all the obstacles. Yeah, growing in China and cost of HR, we need for new businesses, we need competent resources, and we need to support growth where we see them great opportunities. In terms of opportunities, consumer demand to be rebound, yes, we hope in certain segments. But we are addressing more products to portfolio. Through this we want to grow.
We are addressing more focus on adding sales force in the markets, in the segments where it makes sense. With the private labels, we see a much bigger opportunity to grow than only 34 countries where ASBIS operate locally. They have multiple products, but we asked last year to empower significantly product lines of our private labels. We reviewed our strategies during the course of last year. Now it's execution, most important part, of course. New markets. This expansion to Africa, it's strategic. It's not opportunistic for us. It is new. It's a good set of additional markets for the group, and we want to grab the opportunities. With, of course, we need to invest. Returns are reasonably fast.
On dividend payments, we mentioned already, and as you see that decline in net profit, we explain that was due to one-off events and reclassification, because Forex crystallization, it does not decrease, it did not decrease actually, equity of the group in just reclassification between P&L and balance sheet. Yes, exit of Russia, one-off event. Profit from operations fundamentally strong. Respectively, also it is backed with improvement of cash flow, so it give us good comfort to continue paying dividends. Like I said, you like and I like it a lot. We will do recommendation to AGM. Balancing. That's balancing between investment of new things and developments and the ongoing business.
Basically, what next? Like I promised, what I want to give you a bit more flavor what's under hood, what inside of ASBIS kitchen now. Private labels first. Lorgar, we have new strategy. It is brand for PC gaming and sim racing. We focus on these two categories with Lorgar, not only with peripherals, but we want the brand to sell complete solutions. We see good demand. People have money. It's good toys for big boys. And sim racing and PC gaming, yeah, people have money, have no time, want on demand or build to order solutions. We want to address solutions.
AENO, it's not only smart heaters, which is for last two years, it's really a hot product to sell. It's really bestseller across Europe. We already sell it in Africa. Great thing about Africa, their winter is when it's our summer, so we sell heaters there when business slow down here. More smart and nice domestic appliances in the big category. That's what we expect. That's what we're demanding now from AENO. Okay, Prestigio. Prestigio in, we announced a year ago that we're restructuring because I really want to have to make it premium brand. It was premium, then compromised. I don't want to compromise it more. Prestigio is coming with premium accessories already this year. Great lineup, and hi-fi audio. We want to play in the premium audio.
We have Bang & Olufsen, which is luxury audio, right? Ultimate. We want to play premium, but not entry-level. That's where we see money. Perenio, major focus is and will be now on their IoT platform, which we extended, and robotics management now on this platform. Robots and sensors can collaborate, and this is one of our strengths. There are not many companies in the world who are able to operate and to manage complexes of robots and IoT sensors. That's major focus of Perenio. They will be more on the back end. We may put even the platform to, or to Aros. We discuss it already internally. Canyon, they have very good devices in the portfolio.
They had limitations last year, but they got used in the past to sell in CIS, Russia, Belarus, et cetera. It took them some time to understand that for Eastern Europe, for Middle East, for Western Europe, where there are other products are demanded. They are there. They are really they have great opportunities. They engaging and expanding with their products across retailers, consumer electronics retailers, and mobile retailers as well, and telecom operators. Prestigio Solutions, they also enlarge their portfolio. We have now more products in the portfolio addressing conferencing and office solutions. These private labels, it's what I want to say, we prepare them to grow during course of last year. We continue.
They need some time to have these products to markets, to develop products for markets. Canyon, AENO, and Lorgar will not play only on OEM. They do ODM, and we have comfort and possibility to do it because of our engineering capability, because our capability to manage factories, and we want to leverage on that. Many products coming during course of this quarter, next quarter, but majority in second half. This piece. Our premium retail we expect them also to grow. They are growing very healthy. It is profitable business unit for group. Omnichannel, not only retail, but e-tail as well. We plan about 8-10 more doors to open this year. That's about our monobrand premium retail.
Breezy, that's where our big bet is. Breezy, like I mentioned earlier, already number one in CIS. They demonstrated great solutions for trade-in, the grading and upgrading factories of Breezy to make it really cost-effective and efficient. Instead of having 40 human operators, we do the same job with 20 robots. This factory, by the way, here in Warsaw. This afternoon I plan to visit it again. We hope that we will phase it in with full power in April of this year. It gives us then a quality leap to support this trade-in and grading and upgrading and to grow this part of business. We have great demand. Our bottleneck is supply, but we also had a bottleneck in the processes.
We want, as I said, that's why automation and robotization with help of AROS right answer to this need. We plan to also to provide this grading as a service to third parties. A few words about Clevetura. It's probably oldest startup of ours, you know. They come now with a second generation. The mass production of standalone office keyboard is next quarter. Important thing that they integrating their solution already they have multiple projects with multinational brands for next generation laptops. This technology been selected. Wish very good luck to them, but they have opportunity to take big ticket. We will be looking for exiting sooner or later because it's already they're six years with us.
We will find the right time for that. Embio Diagnostics, one of our startups, they have great solutions for in the past for RNA viruses, including coronaviruses, these fast rapid tests with AI engine and cloud solution. Then they extend it as well. Now this, they are selling water quality solutions. It's for shipping industry. Latest product when they came in, it is Airbelt, it is air quality measuring device, with again, with AI and smart applications. Actually, the reason why we asked them to do it because we didn't find in the market nothing which was for reasonable price and reliable and good sensors.
We studied a lot because we want also to be part of our IoT, that these measuring devices work together with ventilation, smart ventilation systems, smart air conditioning, fully automated, and they develop it now, and they're marketing now. Already, they have good orders from different geographies. It is result of great cooperation between our engineering and ODM capabilities, and their brains to make these wonderful solutions. This good example of our corporate venture, because they leverage on what we have, and we leverage them respectively to market and to sell this product, unique products. Promed certified their production line in Cyprus, in our facilities, in our high-tech cluster in Limassol, already get certified, and they produce collagen, clean collagen. It's medical class collagens for universities.
They already have orders for one year ahead. Again, I believe it's good investment. Of course, we'll see going forward. New thing, very interesting. It was also. It's an example how we do this investment more than a bit more than a year ago. We just provide space to a few smart guys from Israel, and after one year, they prove, they develop this solution, and it's already industrial. This year, they do limited production. It's pre-sold already. What is that? I call this Project Monster. It is a big machine, six meters high, and what it does, input is a plastic waste, output is energy in terms of liquid fuel or gas.
The machine with all facilities which need about 50 square meters, not more, produce about 6 megawatts of electricity in one day, in 24 hours. Before we invested, we also now organized for them meetings with prospects from their customers. We see great appetite, and it's again one of the examples because we as ASBIS, we want to sell it in future also, this kind of solutions. This our answer to green energy, because if you talk about three megawatts in photovoltaic if you convert it to photovoltaic, you need 3 hect of land. Huh? Here is your 50 meters. Of course, it's applicable to countries which select plastic waste to other kind of waste.
Again, proven, and now it's moving to production. Certification for Europe almost complete. This is another example of how ASBIS is shaping future. AROS. There were many questions why we don't see that AROS is selling already making billions of sales after one year. No, guys. It's not about that. Our focus is and was on making solutions and selling solutions. Turnkey solutions like the serving kiosks with barista quality coffee, juices, mixes. We did an order of Coca-Cola. Beer serving kiosk, and the kiosks serve different kind of beer. Draft, first off top quality, but Guinness, stouts, and lagers. Under the hood, it's completely different technologies, completely different gases. We wanted to provide to customers these opportunities, and we develop.
Now we are testing very nicely every Friday at 6:00 P.M. in our office in Limassol. We do happy hour to employees and guests. At the same time, the team, they're testing in a stress test because there are lots of people who want it. They fine-tune the technologies and but we are comfortable already this quarter to start marketing these solutions. Security sector. Basically, what we have developed, it's a surveillance, video surveillance patrolling platform for patrolling warehouses, trade areas, parking, data centers, et cetera. It's patrolling. It's connected. There are three platforms in one solution. It's autonomous mobile platform. We have expertise on that. We capable to do it. We did it. Video surveillance platform.
Here there are many different solutions from Dahua, from Hikvision, et cetera. Our IoT platform. Respectively, imagine if during alarm period some sensor alarm, this robot goes to that site, to that point and visually give all information to security and then can do siren alarm, and believe me, it's much faster than human security guy who might be. It doesn't sleep at night, by the way. This solution is completed. We showcased it in November in trade show in Dubai. We continue to market it, and we have already orders in pipeline for that. New thing also of AROS. One of the category where we want to play was cleaning, right?
We sign up a Chinese vendor, big Chinese startup, with all pluses and minuses of third party, but we realized that they're not able to do outdoor cleaning. At the same time, we got this expertise, and it is second generation product. It's for outdoor cleaning, sweeper, for large parking spaces, et cetera. First working sample of the second generation, we expect to have in Cyprus in April. Again, usually it takes three, four months to tune, but this year we will start offering it. With great ROI also, not dependent on Chinese. Because what you do with robots actually, we take. Yes, we can take mechanics from China, but we realize that we need to do our software. We don't want to be dependent on any vendor.
We have our own platform, so robots and sensors work to get there. That's what we are developing. Next one, complex robotic solutions for warehouses. This is a SketchUp for our Czech distribution center. We start implementation in March, where robots will offload containers, I mean, loose boxes from containers, with computer vision recognize, sort, and we do palletizing. Also, we have multiple bottleneck in warehousing. To offload one 40-foot container of multiple SKU of loose boxes. Because Chinese, they provide usually loose boxes, not on the pallet. It's up to seven hours, and we are getting 20 containers, for example. Huge bottleneck. Then 60% of pallets which we receive in a distribution center, it's mixed pallets, mixed SKU. To store it in the warehouse management system, you need to have one SKU, one cell. You need to do sorting.
I have 20 people in one shift who's sorting it there, and I want to replace it with 4 robots and 8 pallets, and we have great palletization solution. We looked again, we looked at others. I saw Amazon video, nice offloading from container. We call Amazon, say, "How much is that?" EUR 200,000. Thank you very much. Return on investment, 10 years. It is. We develop ours. We have the solution for fraction of a cost. We have autonomous mobile platform, we have a robotic arm, and we have software. Believe me, it is not ASBIS problem only. This is very typical solution for logistics operations and distribution centers. We will be offering these solutions to others. Last year, this year till now, we want to make it for our own.
Again, I prefer to pilot and test it internally, but it will come to market with completely different price tag, like others do, Hikrobot or Amazon Robotics, etc. Palletizing solutions for the conveyors, we also tested markets. We understand what is needed, we develop it. We have it. We are marketing this quarter now already. Teams are trained, and we're marketing it. The reference we get from prospective customers is one of the best-in-class solutions, and we know it. We don't repeat others. More to that, we have team who make arms itself, motors. It took us one year. From December, we are selling motors for robots. We've been selected by three companies who develop human robots, humanoids. They need 16 motors.
Three of the companies, they already selected 12 motors out of us. It's not in the future, we start selling. Joints, all motors, we are very comfortable, and we want to have one of the best-in-class solutions. Yes, we need time for that, but I prefer to, instead of trying to sell third parties, especially Chinese, I prefer we use some of the, as I said, mechanics as building blocks, but to make the solutions, and I want to add solutions to life, different kind of solutions. I just gave you some examples. We have more solutions. Yes, I don't say that we are not rushed to sell. We want to sell it, but we want to sell solutions. It takes time to develop them. We develop multiples of them already.
It's project-based sales. Because of our engineering capability, we are comfortable to make bespoke projects for large and medium enterprises. If I depend just on third party, whatever, Chinese or Japanese, I cannot offer it at all. I only can offer what they provide to me if you need. In the projects, we know, customers have different, I mean, same needs in general, but with different features. Be capable to address them. That's what I wanted to share with you guys, to give you a bit more flavor what is inside of ASBIS kitchen. Yes.
Miko.
We delivered three consecutive great years. We are comfortable to do it and more to gain. We have great opportunity. Thank God, we have great opportunities for growth, and geographically and in multiple business units of ours, being Breezy, robotics, et cetera. We want to support the growth. Of course, we'll be balancing. That's my message. Questions?
We expect like
Excuse me. Hello? Hello, hello. Can you hear?
Oh, Taras.
Young. Yeah.
Do you expect the total dividend will be the highest in the history with dividend for last year?
The dividend has.
Why not?
Yeah.
I will see. Yeah, we recommend to. Oh my God.
AGM. The dividend will be shown in the audited financial statements, which would be end of March.
Our recommendation.
Our recommendation.
Yeah, we follow protocol. We will announce on them.
It's not yet decided, but the opportunity is there.
Well, I'm just asking about your exit progress.
To me.
The major shareholder is sitting.
Yes, end of market.
Could you please share with us what is your general perception of the market nowadays? In the comment to the results, we can read that you expect market stabilization this year. However, it might occur to be optimistic assumption. On the other hand, let's say Gartner expects global IT hardware devices market to grow this year 5% compared to 10% decline in 2023, so the positive swing should be meaningful. How do you perceive the market from your perspective?
Yeah. Analysts say that this year it's expected renewal cycle of client devices, computing devices. We definitely want to be part of it. We will be part of it. Again, we're not only in IT, and again, it's also not homogeneous. You have client, you have data centers, you have networking solutions. Yeah, you also play in consumer electronics. We don't depend any longer on IT.
In general, Jakub, in reading what the analysts are saying, we are also optimistic, and we also expect growth. The growth rates you mentioned are well within what we expect to see. The thing is, and we said it before, with the new products we managed and the new contracts we managed to secure, we believe that we will be there on these growth levels with the market. We are also seeing. Again, it will all depend not only on the instabilities or if the markets will finally stabilize and the inflation will stop jumping with the growth rates we used to have the last couple of years also. The sentiment of the consumer is we are looking also to change.
Okay. Thank you. My other question regarding your costs, namely headcount, because the headcount increased by 20% last year, and when we should expect this to pay off. Could you please maybe share with us what was the result earned by AROS last year, and what you expect this entity to deliver this year, and when we should expect the break-even point of AROS, in which year?
Okay. I start from last one. Break-even point I expect next year. We have optimistic plan or stretch plan to do it this year. Again, in this area, it's very important to get serious portion of a market, and then milk from that like in any other sector. What was the first part? Headcount.
On the headcount, biggest headcount growth we have from our retail business unit. That's where we have low-cost labor, trade floor personnel. Since last year, our Apple premium retail opened extra doors, 6 doors we opened, right? They need staff. I've mentioned about Breezy omnichannel. We see it's very effective. We want to let them expand as well. It is headcount, but it's trade floor retail personnel we talk. Of course, you need educated personnel, you need management personnel next to them. This is major driver of headcount by department.
You added 450 employees last year, and what we should expect this year on in this respect?
Okay. Last year, of course, we added staff to our new operations in South Africa, right? About 13 heads. We need more for this year since we're starting Apple now. Retail headcount will grow because we want to expand it with our retail. We see it healthy. The sales force for other new products in the portfolio, it's like natural growth in each country. If we grew in Poland 60% last quarter and we want to continue to grow, it will be headcount. It's relatively a fast return on investment. We talk about 6 months to 12 months.
Yes, but probably the significant part of these new employees were also connected with AROS development. Do you think you need-
AROS, I can tell you. AROS last year, it was at $3 million.
Pardon me?
About $3 million actually.
Mm-hmm.
Yeah.
How many new employees were in?
In AROS?
Were hired just for AROS development?
I don't remember from my head. I better check and answer you in writing. We're not talking about hundreds.
No. The last number we counted for robotics division was around 75 people. Again, Jakub
It's one thing hiring because one thing that Siarhei didn't mention is the optimization of our warehousing. By opening new warehousing and by expanding the warehousing, obviously we needed also their headcount. Not the most expensive one, but extra headcount. That's another addition to the amount you mentioned. On robotics, we discussed it the other time. It is a special skill set requirement. It is a more expensive special skill set requirement because here we are talking about data analysts, about engineers, about software engineers and not only. Very expensive set of people. We understand that the robotics, it is something that we decided is the future to invest.
We are investing and we expect to have a return, but we also need to understand that we need to be patient, and we need to do it correctly. We rushed, and we made it fast, when we entered this segment almost two years ago. Again, this gave us an edge. You will not find the solutions that we already developed without any other IT distributor these days. Okay, if your question is whether we plan to increase more the headcount going forward, I think our-
No.
Our answer is that with AROS's we have reached a level where we believe we don't need more people, but we need to optimize these people. We need to optimize these processes, and finally get the expected return because we invested to get return. Yes. All right? Yes, it was a different life cycle of the project making a robotic business, but we are dancing the way forward. We want to see it happening because we all believe that it is the future going forward.
Okay. Thank you. Moving to the other side, you can see some space for headcount decrease following deployment of these robotic solutions in your warehouses or in other fields?
This, as Sergei already said, we used the robotics that we developed ourselves to optimize our own in-house operations in our warehouse in Czech Republic with Breezy and with the palletizers. We are now entering into that saving mode, saving modes. Instead of hiring 10, 20 people in the warehouse, you deploy 5, 6 robots.
Okay. Thank you.
You're welcome.
More questions, please.
Is this merging st-
Go ahead.
I can hear some hesitation about the gross profit margin in long term, if these 8 percentage points are sustainable this year, what you expect?
You didn't hear any hesitation. I don't know from where you got the hesitation.
Kosti is referring to endless debate between you and us.
The gross profit margins, it's an ongoing effort. What I said, actually, and I repeat it was quite difficult to reach there. It's even more difficult to sustain there. It's not impossible, though. We are doing it, and we have been doing it consistently. I understand that you remember because you follow the company for many months, years now, that we had arguments in this room about how sustainable they are. They are sustainable. What we need to ensure is we need to refine constantly our position, our portfolio, and always finding new ways of raising the bar because the competition is there. Apple is a commodity these days, and it's not getting more for the distributor.
With all these actions we undertake, we spoke about Breezy, we spoke about private labels and new product portfolio we add, then we believe we sustained and we are in a good shape to sustain gross profit margins. No hesitations.
Okay. Piotr.
The second question is, Windows will stop support current version, I think next year. Do you think it's gonna have some impact on your revenues in the future?
That's exactly what we refer to, the driver of, or one of the drivers of the computers' renewal cycle now. It's that Windows 10 stop supporting this year, if I remember. Yeah.
This will happen this year. Yes, this year?
Yeah.
Okay.
Early this year. For this year.
Okay. Thank you.
Luke. One more.
Can also maybe one question about very popular topic of AI. Do you have any business, and in which areas do you see any areas of growth there? I don't know, in data centers or networking or maybe some other things.
It is definitely very popular topic. We now users of ourselves. I now start practicing Microsoft Copilot in helping me personally in my work. In terms of business, absolutely, we have multiple projects and more projects with AI being either machine learning or computer vision. For example, for Breezy, we're developing AI dataset and machine to recognize scratches on the surface of smartphones, right? We have now this detecting medical measuring devices of Embio, all products from there are AI-driven.
Right.
I believe it more and more will be coming. We use AI engines as well of third parties for industrial design. We start practicing it as well, just to get first ideas. Design is completed by people, but these creative ideas, our designers employ AI already. It's coming around us, yes, we have the capability.
I got a question-
We are not company who develop AI software. No, we use third-party software, as well as building blocks in our solution.
I got a question on, South Africa and a contract with Apple. How many distributors are on this market, and what are your targets?
We will be second distributor. Plus, Apple sells to some two telecom operators directly. Total available market for us, the size of opportunity I quantify to first year about $60 million, second year $150 million, third year above $200 million. Thank God, ASBIS has opportunity to grow.
Just to mention that the contract kicks in from second half of this year.
It's from June.
From June.
Okay.
I would like to ask you a question about you getting out of Russia. Should we understand that your revenue growth from Kazakhstan will be lower in the upcoming months, or there's no connection at all?
Zero.
There is zero connection between.
Banks do not work. There are no payments supported already for a while. The last year already not existed.
Moreover to that, our revenue in Kazakhstan is mostly Apple. We are the number one distributor of Apple in Kazakhstan.
One and only.
The one and only. We all understand that the Apple products are easily traceable when they are activated. By any chance that our products end up in Russia, it will be immediately recognized. The group has declared and has all these mechanisms in place not to allow any product of ours to go to Russia. All right. We have zero impact from what you mentioned. To add on to what we are saying is that the banks in Kazakhstan, they cut ties now with Russia because there is an ongoing question mark about Russia and Kazakhstan, Russia and Turkey.
Yeah.
All these countries and stuff. We declare and we are confident that none of our products reach Russia, even indirectly.
Yeah. Apple, I mean, Apple measures activations, they can do it by geography, and they confirm to us that we control our channel quite well. We don't have leakage much, very minor. When we sell through retail at Kazakhstan-Russia border, okay, retailers, people can come. We control it well.
Thank you.
I wish others could control this well like we.
Can you give us some comment on the situation in Ukraine? The second will be what do you expect in terms of the credit costs, in terms of the level of the external financing, and also the high rate cost in percentage point?
Okay, I will take the financing question then.
Should I be-
The last years we saw a significant increase in the interest rates across all of the countries we operate, across all banks, central banks of countries we operate. This has reached a level where we believe that we are very close to the ceiling, if not finally at the ceiling. We expect this to stabilize at these levels. Maybe another hike or maybe we see towards the end of the year some decrease. The group though, because it is expecting to grow, it is expecting to utilize financial facilities to continue hedging the local balance sheets, and avoiding foreign exchange losses.
We believe that with the level of business we run and with the level of facilities we have, the financing cost might be a bit increased before it start getting down. Now, the situation in Ukraine, I will make a minor comment, and then I will allow Siarhei to say something more. Recently, we hear from colleagues and from the team that the airstrikes in the major cities have eased down somehow, but every now and then they have alarms that they have to go to the shelters. The situation is extremely volatile and fragile in the country, but yes, there is business going on.
There are a lot of questions now as regards to the Ukrainian relations with the Western world, more specifically with the U.S., and whether the funding continues, and at what level the funding continues, because we all understand that the Ukrainian economy is boosted by this external funding. However, we see good sales from Ukraine. Ukraine remains our second biggest market for the group, and yeah, a possible stoppage of the war obviously will only do good to the country, but also to the humanity. This as a general comment, Siarhei. I don't know if you want to add anything else.
No, I think you covered everything.
Sure.
Only what really worries us is this border strikes between Poland and Ukraine. It's really impact transportation of goods to country. Okay. We just follow and work in environment. We admire our colleagues in Ukraine who really manage the business very well and being under this sirens and missile attacks, that's environment they work, but it is demand on edge for sure.
Fine.
Piotr.
Yes. A couple of questions from my side. The first one is a follow-up from Jakub's question regarding AROS. What was actually their financial result of the last year, and what is the target for this year for this company?
Of last year, you mean sales?
I mean, net profit.
Net result.
Net loss actually.
Net, net result.
Yes. Net result.
Yeah. It was about, as I mentioned, $3 million something.
Okay.
From that business unit. This year, in the budget, if I recall, it's about $1 million.
Okay.
Maybe.
million of improvement. The second question regards new warehouses opening, and what are your predictions for the amount of money needed to up stock these warehouses?
We will absorb it last year.
Okay.
We did it during course of last year.
Okay. Also Kazakhstan warehouse?
No, no. Kazakhstan is a new one.
What are your predictions of additional inventory needed for these new warehouses?
Additional inventory needed if you have additional business. Yes. Look, we have Kazakhstan. We completed budget review with them, and we expect net profit improvement, incremental.
That's for sure, but I meant the cash flow impact.
You mean CapEx? CapEx?
Cash flow. Actually, cash flow impact. We're mainly working capital.
It's self-financed there. We do not put own finance there. The new warehouse is financed by the bank, the local bank. There won't be any impact on our working capital ability.
No, Piotr say you need more inventory.
That's right.
... you need more cash. This is great. I have more business. That's why I'm doing it.
I know that, but I just, in cash flow perspective, look, analyze this because it impacts your dividends each.
It won't.
You went from there to dividends. No. Look, I tell you for currently I have inventory in Kazakhstan in three different locations. It's very difficult to manage. It's already four years, so we reach bottleneck. That's for we see opportunity to grow because we have more products. We are adding more and more products to portfolio, right? That's for this distribution center will streamline our process. When you have inventory in three locations, the basics of supply chain, you inevitably have more aged stock, and you have obsolete inventory as well. Sorry, lack of supply. Yeah, it's improving. It still improves processes. If we have need of more inventory, it's not driven by size of our warehouses, it is driven by sales opportunity.
We have our KPIs on inventory days that drive our supply.
Okay.
We have cash and vendors support us. We have lines from them.
Okay, I thought that so many warehouses will need some doubling of at least part of item SKUs.
Can you repeat, please?
I thought that many warehouses need doubling some part of SKUs 'cause you needed to improve your delivery in all of warehouses.
We have, we follow
Okay, if you don't recognize that problem, perhaps.
No, it is really not a problem. We are solving our problem.
Okay.
With that.
Another question regarding African markets. Do you have any projection for the sales in 2024? What is your target? Will you provide us with information in financial statement about the sales in African markets?
We plan to do that, yes.
Yeah, when we will release forecast, we will also disclose this numbers.
Okay. The last questions regarding net profits and net results of 2024, 'cause you mentioned a couple of times that you plan to grow revenues, but I'm not sure if I read it correctly. You're not so confident about the growth of net profit?
It's not that we are not confident, but again, the strategy is to balance between realized profit and support growth opportunities. Yes, we can milk everything now, even from AROS, just remove competent resources who develop and capabilities to develop new solutions, move to low-margin distribution, right? Okay, I can show good result there. Are we here for one-year result? No, we are here to balance it, and we demonstrate to you three consecutive years that we deliver results and we grow. For us, it's important to invest and to support growth, with retail, with Breezy, with other solutions. I want to make another level of ASBISc business. That's what I'm going for.
Okay. What part of business, in your opinion, can wait on 2024 results? 'Cause you mentioned that AROS should improve. I think that Breezy is also a growing business and should improve results even in short term. Should we expect that Africa could bring more losses than 2023?
Yeah.
Which business is that you mentioned that you need to support?
Breezy, we will support, but again, we have opportunity to expand. We have opportunity to expand it to Middle East. We have opportunity to expand it to Eastern Europe. Okay, I can milk a little bit sitting, continue to sit just in CIS, but it is a very limited business. What should I do? I have opportunity to grow, to expand to another countries. What must be my strategy? To milk now or to support the growth? Yes, it will be extra manpower. You need to increase expenses for some while, right? With expectation then to reach much bigger return. That's what business about in my view.
Okay, now is the last question. What was the total investment in your startup portfolio? Do you plan to increase it more or is it already
I believe it's enough, but you never know. For example, with AROS, we are also open to growth through acquisitions. We are looking for acquisitions. We are open for that to increase and to empower again ASBIS being preferred supplier in this segment. In terms of startups. Okay, Mario is pulling strings, so it's okay.
Okay, thank you.
Any other questions? You have a question you wanna?
Last bets.
Yes.
I'm just waiting for the bus, thankfully for that.
The last bets.
All right.
Done?
Yeah.
Thank you very much.
Thank you very much.