Let us start. Thank you for coming and being with us today. So in our agenda is to give you an update of ASBIS Group development, key corporate events, financial results of Q4 and 2024 financial year, preliminary not non-audited yet, and short outlook for 2025. So no translations will go straight. Okay. So ASBIS Business Units, I start from. First, so IT distribution, our core and strong business. We serve about 16,000 resellers and system integrators through that. It is quite strong business. We have leading positions across EMEA and multiple product lines and categories and vendors. It demonstrated last year significant, very strong double-digit growth, primarily due to our strength and ability to supply for data center businesses and support this AI revolution, which requires lots of data centers.
Client business, it's more flat, but this data center business actually, it's not only grown in the past, but it is expected to grow more than 20% on CAGR next coming five years. And respectively, it is focus of ours. Through B2B arm of ASBC, the reselling business unit, we deal with all kinds of enterprises, B2B, small, medium, large, and government tenders as well. And it demonstrated quite good growth and strength too. Consumer distribution, also a very big portion of our business to consumer route to market through retail chains and e-commerce engines. It is an important part of our business with Apple, but not only, multiple product lines. There were ups and downs, especially in Kazakhstan. Last year, where so-called DTI regulation took place in April of last year, which resulted in significant limitation of consumers to access consumer credits and installments.
This tool actually is critical for us in the markets because it's the only effective tool to fight illicit traders, which are unfortunately in all countries of CIS. AROS, ASBIS Robotic Solutions 2024. Yeah, we designed and developed in about eight categories. However, we measured ourselves, and we decided to limit these categories by four, which we believe have good prospects. We don't see actually in 2023. We already realized that simple distribution of robotic building blocks and components doesn't work. Respectively, we focus on designing and development solutions of ours. Basically, from the end of 2024 and going forward, we will focus on ROBO SHOPS where we see good demand and we develop very good solutions. Palletizing, which is the biggest category in industrial robotic solutions today on the markets. Custom robotic solutions, again, for different industrial applications and mainly focusing on cobots, not big industrial robots.
Motor actuators, which we developed and we already supply for humanoid robots. We keep these four and that's it. Am I loud enough or?
Closer.
Microphone. I didn't use it. I did not use it at all. I thought I am loud. Okay. Our Premium and Luxury Monobrand Retail Business Unit with we finished last year with 34 Apple doors and six doors of Bang & Olufsen. Yeah, it's quite good business. And yeah, we have a formula to drive it successfully. Actually, we started preparation from the end of last year to a special project what we have reached with Bang & Olufsen on develop and operate flagship stores in Southwest Europe. Mainly, the first one will be in next quarter open in Milan. And also three more stores in California, namely Los Angeles, San Francisco, and Palo Alto. Actually, ASBIS now enters with this project and not only to the U.S. market. We see also good opportunity for our private labels. The market's big.
We already started some sales, but yeah, it is a good development for this year. Trade-in Business Unit, Breezy, demonstrated double growth last year, reaching $50 million business. In 2025, maybe they will not reach $100 million milestone, but we believe it will be close to that. Yeah, this e-commerce business is definitely part of our strategy going forward. And so, news about Corporate Venture Investments. We can move to the next slide. We recently appointed and contracted a professional company to look after our startups. Yeah, all of the startups we have, they promise great and revolutionary technologies, but it's all about business. And the mission of the company is to work very close with the startups, help them to obtain grants, and there are already some projects open. And also support with investment rounds in cases they see it's necessary and we see it necessary.
Namely Blend Energy, which basically converts plastic waste to energy. It is subject to European grants. Atonomics, which is outdoor and indoor cleaning solutions, also eligible and more to that. EMBIO Diagnostics, they got already a 1.5 million grant last year. Our aim is that the startups must be less and less dependent and do not ask money from us anymore. That's on that part. About geographic setup. Basically, yeah, we continue to develop business with focus on our core markets where we have many years, namely Central and Eastern Europe, Ukraine, and CIS. No Russia, no Belarus. The Middle East Gulf area and North Africa and South Africa. Actually, glad to admit that South Africa last quarter reached a level of top 10 countries of ASBIS Group.
So this investment pays off already, and it is a growth opportunity for 2025 since we started Apple there only from July of second half of last year. For this year, we see and we already made a decision to enter with local operations in Saudi Arabia. Big market with good opportunities. We supplied from our Dubai and ASBIS Middle East, Dubai DC Center. There are more opportunities, and we see great growth opportunities through local operations as well. But it will be still a combination. We will continue multiple product lines to serve out of Dubai. In Africa, North Africa especially, we are now looking very closely and study Egypt, which was two years on kind of vacations because of strong currency regulations and lack of access to the currencies, which impacted import a lot. Now it is over. Size of opportunity quite good.
We may enter with local operations in Egypt this year. All other countries like Algeria, where last year we supplied to about 28 government tenders, the market dominated by government tenders. So we have our strengths. We don't need to go locally. We serve it well from our distribution center in Czech Republic, same as other countries of Northwest Africa. We pay this year more attention with the sales force of ours to West Central Africa, Nigeria, Ghana, Côte d'Ivoire, Senegal, Morocco, and Tunisia. But it is no plan to set up local operations there. And two distribution centers. Actually three, Prague, Middle East, and South Africa serve quite well need of distribution to these markets. That's update on geo setup. Few key corporate events happen recently. So we launch ASBIS ROBO SHOPS in multiple places in UAE.
Actually, we see Gulf area, namely again, KSA and Emirates, with quite good appetite for these kinds of solutions. They want to be perceived innovative. We help them to do it. Interim dividend payments happen, as you know, in December of 2024. And in February, we launched and announced Breezy grading and upgrading factory here in Poland, actually near Warsaw, by Industry 5.0 standards where AI, robots, and human work together. About ROBO SHOPS. So basically, we do three major solutions. Most demanded is barista quality coffee ROBO CAFÉ. And now we're introducing not only coffees, but snacks as well to be served by this robot. RoboPub, which is serving draft beer. It depends country by country. The demand. And then Mixology RoboBars, which also now installed. And we have demand mainly from Gulf, but also in Europe as well, including Cyprus.
We're preparing actually production of these products now here in Poland, in south of Poland. We plan first output from the production in June to satisfy demand what we have in the pipeline. More is coming, I hope. Yeah, a few more words about Breezy factory here in Poland. Basically, it is structured with 18 robots and full automated grading, data erasing, mechanical, visual defect detection of secondhand smartphones. This is part of our requirements. So this factory can easily operate in one or two or three shifts without pay rise. The robots still do not ask it, and they're not in the trade unions as well. This setup and the standards what we developed it by allow us now to operate with large enterprises and regulated telco operators as all is done by latest European standards and industry standards.
The architecture of the grading and upgrading factory allows us now to replicate it and make a startup, small setups in countries like Kazakhstan, like South Africa, like other countries, Ukraine as well. Then easily scale with and very cost-effectively scale these facilities where business demand and the size of business is growing. It was one- and- a- half years of development, so realizing state-of-the-art facilities. These facilities, actually, it's only 800 sq m. If human operators of such size factory like we see our competitors in France and other countries require hundreds of human operators and a lot of space. That's kind of, yeah, development and achievements I wanted to share. The video. Okay. [audio distortion] So basically, it is very consistent in reporting. We eliminate human errors factor.
And actually now, also we will extend that with a fully automated packaging system. We just recently arrived, and we plan to start implementation in March. It is really state-of-the-art facilities here in Poland. In reality of last year, Q4 revenue, as you saw, started with -9% year- on- year. However, due to completion of significant projects, and again, mainly for data centers in Slovakia, but not only, it was multiple products and projects completed. So they really boosted our December sales, which helped us to be in line with the range. And now I hand over to Costas to give you a picture on financial results of Q4 and 12 months of 2024.
Thank you, Serhei . Hello everyone. He handed over to me to say the boring stuff. He said all the exciting things to you, as always. Anyway, our financial highlights for the quarter four.
Finally, after a very big effort from all the group, we managed to deliver what we believe a very satisfactory result with revenues reaching and exceeding our, let's say, expectation in December, with gross profit margin stabilizing around 8%, and finally delivering $24.6 million of net profit, which finally allowed us to be close to the range we promised to the market and satisfy what we wanted to once again that ASBIS delivers always on its promises. And it is for us considered to be a great achievement given how difficult the overall environment we had to face last year was. But nevertheless, the group and the management team consider that we reached the target, we reached what we wanted. And here we are delivering these results again. We were arguing which one was the most profitable quarter. But then, yeah, quarter four of 2021 was exceptionally high.
Therefore, no comparison there. But also no comparison with last year given because we have to remember that last year we had to face all these write-offs from our exit in Russia. That's why it's not representing to make comparisons of net income of last year and this year. However, the numbers speak for themselves given that we have delivered almost $25 million of net profit in quarter four of 2024. Now, one very important key ingredient for us is because we have a relationship now with most of you 18 years being listed in this market. And every now and then we give you some updates, some promises which we come back and we all are judged on what we say. We're happy to see South Africa entering our top 10 countries. We expected it to happen.
A lot of people, due to multiple other Polish companies going to Africa and not making it, had doubts. We said to you that we believe that we can do it in South Africa, and it seems that we are doing it, and we are very, very happy to see the prospects of the country growing. We will see a very big growth, obviously, in the first two quarters of this year where we have full impact of our Apple sales in the country, but not only. Poland is delivering exceptionally with a very dedicated and very high-skilled team in the country, alongside with Ukraine that also managed to bring satisfactory results given the situation they are into. I leave on purpose Kazakhstan, the last one since it is the biggest market of ours currently, but with all the challenges, we said it so many times. Serhei said it before.
The inability of consumers to have access in credit made it much more difficult for us to compete with gray market and black market importers. But still, we do whatever is possible in the country. We hope and we believe that towards the end of quarter two, things will be much better from Kazakhstan going onwards, given that there are discussions with the authorities to register all the IMEIs which will disable unauthorized or non-registered devices to be operating in the country. Again, all this is not in our hands. What we can and what we do constantly is to meet with authorities, go to meetings with decision makers in the countries, and make all these steps to happen. Other countries which delivered significantly well were Azerbaijan, Armenia. The Czech Republic picked up more than $100 million revenue, and it keeps growing nicely.
We believe that we have all these foundations and all these product lines to support growth in multiple of our countries. Yeah, with what we said about Slovakia before, the difference between last year and the years before, because in Slovakia, we always had significant projects arising in quarter four, which satisfy big projects. The major difference of last year was that the majority of these projects happened in December as opposed to other months of quarter four. The regions we have and we operate more or less speak for themselves. The impact in CIS and the impact from Kazakhstan, it is somehow recovered by the South African and the Middle Eastern Africa result. Western Europe grows nicely given the ability of the group to service Western European countries due to its pan-European access of products like AMD and other IT components.
But also our private labels grow nicely in Western Europe through multiple contracts we managed to sign, especially in the U.K. and in other countries. In terms of product lines, smartphones remain our number one product line that is driving force of our revenues. Smartphones of Apple, obviously, given that we have the contract in the 10 countries of CIS, including South Africa. We see, though, a very good pickup from service and server blocks, given that there is a huge need for building data centers to support all this AI evolution. And ASBIS is there with multiple brands to be able to support this demand, fulfill this demand. And obviously, with storage that have grown more than 30% year- on- year. Here we say only SSD, but we corrected it to be data storage components. Gross profit margin, a question mark for all of us.
The sustainability of gross profit margin, yet again. And there are specific people in this group that have been questioning the ability of the management team to sustain this. Here it is also close to 8%. Now, going forward and how the situation will be, the management is committed to make it as high as possible. We are working and we are bringing to the product portfolio these products which allow us to be able to sustain higher gross profit margins. This kind of profit margin is the one that made the company change scale, move outside the traditional IT distributorship, which was 4%-5% traditional gross profit margin. The 8%, the 7.5% represent the ability of the group to adapt to multiple new opportunities and grab any space to improve margins.
However, it obviously comes with a price in the cost, which again, it is something which we are very much interested in fixing. Given that we are a dynamic organization, we are an organization that has grown significantly in terms of business-making units, in terms of the ability of the group to generate revenues from multiple, let's say, outside the ordinary norm of IT distributorship ways. Thus, our differentiation also with other peers, which only make IT distribution, which they do it well. But we as a company elected another path, elected a path of being more visionary, looking more forward. This obviously has an impact on our cost structure, an impact that we are considering constantly how to optimize. Last year, Serhei said it at the same time we were here that it was a year of investment.
Now we agreed that it will be a year of rationalization of our construction, meaning that we saw which business units delivered, which we have good opportunities to grow. Therefore, we will optimize on our construction as well. Going forward, the amount of investment in human capital is now judged based on performance as always. And we look that the improvements should come through operational efficiency as well as delivery of higher numbers. Overall, the full year results and the quarter four results speak by themselves. I want to highlight a couple of points. One point is that the group was obliged finally to undertake the Pillar Two tax impact. Therefore, we had in these numbers the 15% of taxation in formerly zero tax jurisdictions.
But also, I want to highlight how the financial costs started coming down given the decrease of interest rates across the border of the countries we operate. Something which, again, we discussed, something again we expected it to happen, and finally, it's being realized. Further decreases of interest rates and better picture on financial expenses is also expected in 2025. The cash from operating activities, a key performance indicator for the group, a key ratio that our analysts are always looking at whether this group should be able to be cash flow positive from operating activities. The answer is here. We manage it yet again to do it. It is the sixth or seventh consecutive year that the group is able to generate cash from operating activities.
It is something which we consider on the one hand an achievement, but on the other hand, for us, now it became a routine. It is now in our DNA that we need to look after cash flow significantly the same way we look after profitability. Leverage and indebtedness, we believe that the group is in a very safe spot when it comes to leverage. We do not have much to say here. Our ability to raise financing remains intact and remains at very high levels. Our ability to choose the financing we use in terms of pricing remains very strong. Our financial management team led by Marios has built a very, very strong relationship with bankers and financiers across the globe. Therefore, we are in a position to lower our financial expenses.
And also our weighted cost of debt significantly decreased by two basis points from 11.9 down to 9.9. And like I said before, further decreases are expected to be seen in 2025 should the overall environment and the overall interest rate movement is on our way. That's it from my side and from the financial numbers perspective. I pass on to Serhei again to give you some more flavor for what we plan, and then we speak again to take questions.
Thank you, Costas. So we can look at 2025 from products, markets, customers, and financial perspectives. And in terms of products, basically what we do, we focus to add more distribution agreements for, again, to increase further strength of our portfolio for data center business, first of all, with different building blocks. And we are getting it one by one. I wish more, but okay.
There are opportunities to grow with current portfolio. IT client computing, it is flat. Anyway, the market is flat. We are adding also some product lines for that, but we don't see it would be significant impact. And e-commerce products of Breezy. So Breezy getting to level when it makes sense from this year, we see to involve ASBIS strengths and leverage on ASBIS distribution infrastructure to market these second life products. It is still not enough supply. Demand is much bigger than supply in these product categories. And yeah, we add more value-add services. We are developing device protect solutions as well to accompany these e-commerce products and brand new products. That's mainly from a products portfolio standpoint. In terms of markets and geographies, I already mentioned.
So we continue where we are in Central Eastern Europe and Baltics in Ukrainian CIS with all pluses and minuses and risks of the markets. Gulf, South Africa, and on the Gulf, I repeat, we are entering with local operations in KSA. Huge investment there and data center and client businesses and robotic solutions as well. I mentioned about Egypt, which is also in our focus. And this interesting project where ASBIS first time in our business life, we enter U.S. markets. Big markets with opportunities. However, for this year, the major focus will be this flagship retail with support of B&O, plus private labels. We have developed products and unique products last year. And we are much more comfortable now to address them also to U.S. markets. We almost complete and completing certifications and go on.
In terms of routes to market, strengths of group, it is combination of consumer route to market through retailers and e-commerce. We have here opportunities to increase placements of goods with current customers, but ASBIS already operates directly through its subsidiaries with all major retailers in the countries where we operate. B2B distribution through system integrators and resellers. Here we complete last year a project of major upgrades of our B2B shops, which allow us to engage with small and medium customers more cost-effective and through offering them self-service, and we enhance all the related processes. A year ago, we complete upgrades of our distribution centers, now the systems and connectivities with our partners, so processes automation is our strength, and we want to leverage on that in B2B segment and focus our sales force to deal with important projects with medium and large enterprises.
A B2B part of our ASBIS reselling business unit directly to business end users. Yeah, we also see it through automation of our processes for small kind of enterprises. So we replicate these B2B shop facilities to this business unit. And yeah, activating customers, more and more customers for that part of business. From financial perspective, Costas mentioned already is, yeah, last year, end of last year, we already measured performance of each business unit and focus group across portfolio of ASBIS Group. Now it's optimization and how you call it?
Rationalization.
Rationalization, right. Yeah, it's already taken place. We are in the middle of the process, but we will continue that through the course of 2025. And yeah, in terms of profit margin, yes, we want to make it as is. There are risks, of course, as you know. And yeah, lower financial costs.
It's also, yeah, I think it should be characteristic of 2025. In terms of risks and opportunities, threats around us, yeah, you know, guys, we work years and decades in these emerging markets, and especially last year's with unstable geopolitical situation in the region, namely the war in Ukraine, which is more than three years now. Last year, we faced issues also on conflicts between Azerbaijan and Armenia. Lately, we also see some tensions growing in that region. But again, this is an environment we are dealing with. One of the key threats and risks is these illicit traders who are major competitors of ours on Apple in CIS countries, and yeah, it's not getting better, and yeah, we see it as a high risk. Anyway, we operate now on 20%-30% of a total available market.
same time we saw last year, early last year in Azerbaijan when the government imposed this IMEI registration and blocking smartphones which didn't pass customs officially. Our business has grown through the roof. We have very significant growth. And like Costas mentioned, we work with the government in Kazakhstan. We hope it will be this year. But it doesn't depend on us. Yeah, we influence to the extent possible and share best practices and share to government as well how much taxes they just lose. But again, it's up to them to impose these regulations. Supply chain disruption. So starting from COVID, we face ups and downs in the cost of transportation from China. At some moment after COVID, it was like up to $25,000 per 40-foot container. Then went down to $4,500. Then last year, again, it was up to $12,000.
Fortunately, went down end of last year again to $4,500 per container. Okay, but again, we managed to put this kind of extra cost to supply chain and adjust our sales prices accordingly. The markets where we work, again, primarily CIS, it's high volatility on FX. So we manage with all tools what we have in hand for years. And yes, this market is also the conditions to work in the market accompanied with the high cost of financing. Again, nothing new to us. But we also face it can be up and down. In Ukraine, it is relatively low today only because they don't provide any financing. If after war is over, we don't know what will be in the cost of financing in the country. We'll see. In terms of opportunities, again, we mentioned and I repeat, this big opportunity and we go for that definitely.
It is supplying to data centers in line with these needs of AI revolution, which requires big data centers. We see that appetite not only in EU, not only in Eastern Europe, but in many other countries, namely Uzbekistan, big investment to that. Kazakhstan wants to be part of it. Also big investment now in Astana IT hub, namely also in Azerbaijan, etc. In Georgia, after elections, we see significant, very serious migration of IT companies out of the country. Okay, market itself is not very big, but yeah, it is the case. Consumer IT, IT computing, client solutions, the only way for us an opportunity. We are getting also new distribution agreements to grow to certain extent on a flat market, which is okay. Then, yeah, big bet of ours on e-commerce, second life smartphones and not only.
We already started in certain countries to buy and to refurb and to resell computing devices and Mac and PCs, computers as well. Second largest market segment or category after smartphones in consumer electronics is TV, right? We also now started talks with big TV vendors for that because they also want to, would like to add the Trade-In as the affordability programs in this category, in this segment. But we are on a, it is opportunity. Doesn't mean that we go and jump on it immediately. We measure and yeah, we will definitely, but we are well positioned for that as well. Dividend payments, yeah, we recommended and we made interim dividends processing interim dividends on the same level last year as the year before. We will give our recommendation to AGM sometime in April for final dividends of 24. However, we also consider to combine dividend program.
We know that every investor likes it, myself as well. But we also consider the growth of shareholder value, and we are evaluating now through buyback programs with further liquidation of the shares. Never practiced it before. We have talked with certain investors who liked and recommended that. But we are open for dialogues with you guys. But yeah, we consider, we evaluate it, but yeah, we will shape it in April and we decide. I think that's it from our side. What we wanted to present and share with you guys today. I'm sure you have questions. Very welcome.
Thank you. You mentioned that you are halfway through as regards your cost cutting, but we saw only 43 FTE cuts in the second half of last year after headcount increased by o ver 600 FTEs during the last two years.
So what more space do you see for headcount cuts in the coming quarters?
Like we said, and like Serhei confirmed before, we have run an evaluation of, first of all, let me go back into our discussion in quarter three to say that we discussed whether we should start immediately strong cost cutting in quarter four. And the answer from our side was that because we believed in making the numbers of quarter four, that we considered it not so right for us to go and immediately jump and start cutting. And we elected to give the opportunity to multiple business units to deliver numbers. And obviously, with the results, it was the right decision to be made. However, you correctly say that there is significant room for us to continue these actions.
We are formulating now, and we are starting, we started already, and we are continuing the optimization of our cost structure because we all understand that making our cost structures much more lean is the answer to any risks that we face from lower either revenues or gross profit. The group has already formulated in January and February specific actions. In quarter one, we will see significant reductions of.
Quarter one, we have to make sure.
Okay, what is we can monetize it. We will be showing in our next reports what the actions were and how much it was affected. It is not only a matter of heads, but it's also a matter of positions. So we have to make it clear because cutting from warehouse people or cutting a significant manager might have the same effect.
Okay, thank you.
My another question, a question regards the effective tax rate, because despite implementation of Pillar Two, in the fourth quarter, the effective tax rate reached only 14%. What effective tax rate should we expect in this year going forward?
The effective tax rate to expect, and the effective tax rate we are budgeting currently is somewhere between 18%-19% year-on-year. Now, you understand that less profits in specific jurisdictions might drive also the tax rate of a specific quarter, as well as provisions that are being made from either half- a- year or nine months. They are now, they are at the end of the year being adjusted with the right taxations around us. But the effective tax rate to expect, like I said, is a number closer to 19%. Sorry.
Okay, thank you.
Can you give more details about the size of the data center business now and what growth do you expect in this year?
Okay, size of the business, I think it's between 26%-30%. It's quarter on quarter because it's project-based business. Sometimes it's more, sometimes it's less. But it's somewhere, it's a big portion of our business.
To understand. What are your clients also? Are these big names like Amazon or Microsoft or what kind of partners do you deal with?
Look, to these big names, mainly our role when we do upgrades of the data centers. But already for them, we see a tendency that they don't use Dell or HP for their data centers.
They rather use Supermicro and these kinds of solutions, which is our vendors and we work with them. There are data centers designed by Microsoft, but there are independent data centers as well. It's multiple. So what's our role? Basically, we provide server building blocks and key components across these servers and storage solutions, namely CPU, graphics cards for GPU data centers, hard drives, SSD, memory, chassis, mainboards, or solutions like with Pure Storage for flash storage for critical. Usually, they're used by telecoms and financial bankers, I mean, financial or fintech companies. No, it's okay. All these vendors, they have much less profit if they do directly the business. It is better for them to do through distribution. That's why they organize. But again, they deal only with leading distributors as we are.
Two questions from my side.
So the first about G&A general administration ratio, it dropped significantly in fourth quarter, was 4.4%. The whole year was 4.5%. Do you see that level from Q4 might be sustainable?
We want to see our cost structure reducing. We want to see the ratios improving. Therefore, answering to your question, the sustainability of the number to 4.4% or 4.5%, it is in our plans to do. It is our way of, like I said, making the company lighter. After, very correctly said by your colleague, we have invested significantly in human capital. We have increased the amount of people we employ significantly, not for no reason, but because we have invested in significant areas. Therefore, answering your question, our aim is to keep a much better ratio in terms of SG&A to cost. It is related also to staff reduction.
It is related also to the package adjustment as well, which we are currently driving. Yeah, it's a combination of actions.[audio distortion]
No, we don't see it improving. The regulations get more and more strict, additional regulations almost every quarter since April of last year. Basically, what's happened? Kazakhstan consumer segment is over-financed. 90% of sales of iPhone, to give you an example, are accompanied with installments, one-two-year installments of consumer credits. Right? So government also sees it as a high risk. Respectively, they imposed these regulations and limitations because in the practice, it was consumer doesn't pay credit to one financial institution, gets it from another one to repay previous. It is like a bubble. So government saw it as a big threat, and I understand from their perspective, it is reasonable to impose these kinds of regulations and limitations, and they are related to regulated financial institutions.
So no bank is allowed to provide credit if consumer doesn't meet certain metrics. Right? There are non-regulated companies who start now, who realize that they can do it. Right? And okay, they're ready to take a risk. They have their scoring systems, but it's a much limited extent. As a result, and as I mentioned, for us, this consumer credit in Kazakhstan and Ukraine and other CIS markets, it is the only effective tool to fight illicit traders. Because illicit traders, the guys who represent parallel economy, who do not pay VAT, do not pay import duties, right? Do not use cash registers when they sell their goods. Respectively, they don't have access to these instruments. They cannot provide. They must provide [self-financing]. They have no other tools, which we have. Right?
And then this kind of serious tool helping us, this affordability thing, been boom, not removed completely, but significantly reduced in Kazakhstan. That's what happened. We use NBFI, BNPL also. We use, again, we have our scoring system, which we developed and piloted in October of last year. Right? But again, we're still in the pilot mode because we need to measure also risks for that. We use and we prefer to use third parties and the risks of, I mean, third parties to take the risks rather than ourself. And that's what we are working on with, say, non-regulated financial institutions in the country. No. No, I don't see so far that it should be more worth. But acceptance rate is already low. And since it's happened in April of last year, so basically, we still have this year-on-year result this quarter and partly next quarter. Yes, exactly. Exactly.
But then year-on-year, because we also adjusted, we also add some instruments, other instruments, instruments which are possible. Right? And Trade-In is also another tool of ours for affordability. Right? And this part is growing. This thing in our hand, right? Vendors support it as well because they provide the top-up programs. And Apple and Samsung on Trade-In with Breezy, we not limit ourselves by Apple only. We do Samsung, we do Oppo, we do other brands. So Android and iOS. And we use these strengths of ours more and more. We have leading position with Trade-In on all the markets. Yeah, I got the news a few days ago that our competitor from Azerbaijan decided to quit. Up to them. Good luck. We have. You do. Limited what we do. The major provider of these facilities is a private bank.
We have and they are the biggest bank with the biggest clientele in the country. So we work with them already three years. Right? Cost of that, it's not small. So we're able to do it time to time. But it's sort of occasional, right? We run programs like for months, then pause and another month. What we also learned to use quite well, I have to say, in Ukraine, we help Visa and Mastercard with their customer acquisition, and they're ready to pay 10% discount to the products. And for them, it's less cost. Right? So we did it in November and in December and for a couple of weeks each, and then it's our sales grow like a 3x. Yeah. Yeah. 60. 60% with the credit. 55%-60%. Yeah. It is not small as well.
Regarding Ukraine, can you give some comments about the situation now in the country?
How are the peace talks received by people? And also maybe in a broader sense, what do you expect if the conflict is frozen? What do you expect in other countries like Kazakhstan or Azerbaijan?
Look. From the perspective of Ukrainians, nothing hello? Yes? Okay. We talk to our colleagues from Kyiv every morning. And again, every previous night, drone attacks, missile attacks. During the talks, during that meeting in Riyadh, same, it was, right? So for people, it's nothing changed. Nothing positively changed yet, right? We all hope that it will be frozen, and we pray for that. In terms of opportunities, it depends on nobody of us knows on what conditions this peace talks or resolutions will be, right? We know well if sanctions will be over, if the European Union and the U.S. will lift its sanctions. We are an EU company, right?
We have big opportunities because we know that IT products, which are under sanctions and we completely follow compliance, are demanded there big time. They're missing this kind of IT products. And there are no distributors there. Zero. That's why ASBIS has a very strong position if it happens. We don't plan to go immediately and re-enter the markets locally. We don't need it. We have good operations and infrastructure to supply the countries subject that sanctions are over.
If I may, I would like to ask about the other country, South Africa. Last year, before entering, you shared with us your expectations regarding the sales in South Africa. Can you do the same regarding this year?
Our sales in South Africa were delayed when we discussed it by a couple of months because we started only selling towards the end of July.
But like what we said to you last year is that South Africa should pick up towards the second half, which happened actually the last four months. Now, if you're asking us to give you a number for South Africa this year, it is a bit premature to say, but we expect significant growth. Significant growth might mean at least double what we have seen last year, which, yeah.
It's a reasonable perspective since we only started in July of last year, I mean, Apple distribution, which is the biggest driver of the business.
Yeah.
No, no. This is that will be initial development, right? It's rather for 2026, say, right? No, Saudi, we expect much faster return and result of that entering because we are already there. Market is matured. Market is understandable, transparent. Yeah. With much more access of financial terms, clear risk management, right? Yeah.
We're already there. We know what we need to do.
Hi, a few questions from my side. I would like to ask you about the current market share in Kazakhstan and how it changed compared to the pre-COVID level. Market share in Kazakhstan, the current one, I mean, from the past year, financial year? I mean, in general?
General market share?
Yeah. Of IT distribution in Kazakhstan.
Our share of IT distribution in Kazakhstan?
Yeah.
I better calculate and we come back to you with more precise IT and iPhone is different, right? IT, I would say our share will be 20%+ . On iPhones, I'll give you this number. We single distributor for iPhones in Kazakhstan, official. And our share of total iPhone activations in the country between 25% to 30%. The rest is dominated by illicit trade.
Imagine opportunity of ours if government will really impose proper regulation. Right?
Okay, so another one. Could you describe what are those big projects, IT projects in Slovakia?
What kind of data centers? Of data centers.
It was data centers because it was.
Majority it was data centers, yes. All right.
So it was like for a government purpose or?
In Slovakia, we supply to all major government tenders and the data centers, but not only enterprises as well, of course.
All right. And could you appraise your own brand share in total revenue for the past year?
1.5%. All right.
And I would like to gain information about your distribution channel in the U.S. And do you already sign any partnership agreements or?
United States, yes?
Yeah, yeah. U.S.
You said it before.
This year, we enter the United States with three flagship monobrands in California. But we also sell currently with our private labels in Amazon. So we do not have yet signed agreements with other retailers. We only have actual sales with Amazon. It is in our plans to penetrate our private labels through the retail channel also in the U.S.
All right. And should we be careful about the drop 6% year- to- year in January? January results of sales. Should we be like?
Yeah. Okay.
But it's mainly Apple and mainly in Kazakhstan. And we repeat it here. It is DTI regulations effect.
Okay, so that's all from my side. Thank you.
But on IT distribution and for data center and then for client solutions, we had quite good growth in Janu ary again.
Hello. I would like to better understand your cost optimizations, especially in the fourth quarter.
Your level of employment has increased by 4% year-on-year compared to the fourth quarter in 2023. Yet your selling costs have decreased by more than 3%. And I was wondering, is it only the effect of, I would say, the structure of employment? So there are fewer managers with high payments, or is it other also processes that you previously have not mentioned that have contributed to these cost optimizations? Thank you.
It's a combination of events, yes, because you count the numbers of the total employment for the whole year, yes. In quarter four, the actions we undertaken, and in the cost structure you see, there is also an amount of compensations paid to the people that have been let off. And this will continue in quarter one as well. So the answer to your question is that a combination of the two.
We took off and we made idle significant positions that carried significant amounts as well as managed to drop some of the employees that we compensated extra funds. Now, we all have to understand that managing to cut from an organization of 2,700 people requires time, requires delicate treatment because you understand that we all know and we all understand that we want to optimize, but we have to be extremely careful not to demotivate. All right? And this is something that we need as a management team to agree and penetrate into the right, into a much, let's say, right structure. Okay? And this is what we are doing. We have done it before. We know how things and what are the important aspects to take care of. And this is what we are doing.
Okay. Okay.
Another question I have is about your share of Apple sales. Has it increased compared to the fourth quarter last year, like 2023?
No, similar. No, it remained more or less stable. If not, a bit less. It is a bit decreased, actually.
Few points, but still big.
Is it around 50% or less?
A bit less.
Below 50%. Below 50%, yes. [audio distortion]
Price range?
No. No, no. The discussion is only currently we are on the idea. We haven't formulated numbers, prices, amounts, nothing. It is an idea that we wanted to share with you because there was a question in the past whether we can consider a buyback. And now the answer is that we are considering to formulate a buyback program, but we still do not have anything solid to give to the investor community.
How do you see that really performance this year?
International performance, revenues, margins?
In 2025? 2025. I said it before that we are looking to see a number closer to $100 million. Yes. 50 something. So maybe we are looking actually for doubling the business, yes.
And the margins, do you know anything different? I mean, the average margin, for example, the gross margin?
The gross margin is closer to 9%-10%, if I recall well.
Yeah. Look, setup of Breezy, accompanied with their own retail and e-commerce. And we see during the course of last year, we see quite positive result of it. That's why gross profit margin is like high single digit or low double digit. Right. In terms of profitability, net profitability, again, we got their proposal. Reasonably, it is growth mode, what they want. We'll see, however, what we decide to allow them to grow this year. But operations in CIS, all profitable.
Last year already. Yeah, yeah. Their headquarters was not covered last year, but each operation from CIS was profitable. Each country, I mean. No, we have opportunity to gain leading positions not only in these CIS countries. We have opportunity to get positions here in Europe as well. And we definitely want to go for that rather than cash a little bit like big king in a small lake, right? Look, like in every business, when it's smaller, you face nice double growth, right? And we have it for the last three, four years, and we expect close to that at least in 2025, but it's not forever, right? But at least serious and high double-digit growth, it is sustainable.
Because there are also regulations in EU, directives of EU, especially for government bodies, which I think next year it takes place, that government organizations will be obliged to have part of their procurement for second life products. So definitely makes sense to grow and to go to the second. We have nothing to announce. We have no. Definitely, if it will come, we will let you know, but no.
Maybe we will not be able to let you know because Apple is extremely strict on allowing any announcements. What I understand. Yeah, yeah. What we want to say is that obviously we ask Apple if there is anything else we can pick up. And there are discussions, but nothing yet to be announced.
Do you plan to publish official guidance this year?
We are considering that.
We haven't decided yet because given how the situation is around us and the environment, we will inform the market in due course. Usually, if we announce, we announce sometime in May. But this year, we will see and we will decide when and whether we are giving out a forecast.
Okay. And in case the war is over in Ukraine and the sanctions are lifted, do you think your sales in countries like Kazakhstan, Georgia will be flat, or do you see a risk for sales going down?
No, we see an opportunity, not a risk, because a definite finish of the war will significantly increase the sentiment across all CIS markets. Because a war in Ukraine is not only referring to the Ukrainians, but to the whole region, yes? Because Russia has borders with all these countries.
Now, it should have been a risk if we sold from these countries to Russia, which we didn't. Therefore, we do not expect that this can be any kind of risk. Only opportunity for us, and we sincerely hope and wish that this war will be finished sooner than later.
You said you plan to go back to Russia and Belarus, right?
We never said that, no. We said that we do not plan to go back to Russia and Belarus if the war finishes. If all sanctions are lifted, though, and we have the opportunity to sell into these countries, we might do it outside.
One last question from my side. $25 million sales in fourth quarter in South Africa. Is it in line with your budget or less or more?
It was more or less in line, but yeah, we hope and we expect growth this year.
It was more or less in lin e with the budget. Because it's their holiday summer there.
Hello. I have a couple of questions. First one concerns your guidance for 2025. Usually, you publish it with the final results of the year, so it was closer to March in previous years, and I have a question regarding the slide 24. I don't know how to understand what is written there, well, in Polish, we could understand it. I mean, this from the left side of the slide sentence that it will be an ambitious goal to maintain the result of 2024 in 2025. I don't know if it is lost in translation somehow, but okay,
I will read it this way. I will read it in English like we read it here because we wrote it in English, obviously. At ASBIS, we continue to strive for more.
We will do our best to beat 2024 results in 2025. What does it mean in Polish? Because for us, it is a positive note, which we give a positive on the one hand, but also a prudent from the other hand, given what the situation we came out in 2024.
Okay, okay. In Polish, you could translate it in.
So it's a lost in translation there. Okay.
So coming back to the guidance, do you see any risk of not beating the result of 2024 into 2025? Because as I see it, it should be quite easy to beat these results.
Thank you for the confidence in the company. However.
Always. I will. Forever.
I will answer you as I did a couple of times in our long-standing history. Impossible is nothing . So you can expect everything in this life.
Now, if we strive for the best, yes, we do strive for the best. If we are doing, and if we have proven to you and to all these years to the market that whatever we promised is what we tried to deliver, it is the case. Maybe you still remember 2008, which we were brand new in this market, and you caught us. We were caught by surprise in the worst financial crisis, which you judged personally quite harsh, the company, but irrelevant to that. I want to make a correction that usually we make our forecast with our quarter one results, never with annual report in March. So if we are to do something, we are to do it sometime in May.
Okay. Other questions regarding Breezy. What is the sourcing of these phones?
Do you see any constraints to the supply of these used phones as a problem with increasing the scale of the business?
Look, so major sourcing is Trade-In through consumer to market. Basically, our Trade-In instruments allow us to source from end users directly. We buy back directly using retailers as agents. It is major source today. And when we started it some years ago, the Trade-In was not popular at all in these countries. Now it is already, and we are growing substantially. But still, we are on a low double-digit attach rate to brand new products. So we have opportunity to grow with attach rate. Besides, and again, it's CIS, we already have rich contracts here in Poland. We are also sourcing from some retailers here. Besides retailers, it's so-called B2B Trade-In, which is not significant in CIS.
However, it's quite interesting here in Eastern Europe and Baltics. Enterprises and telecom operators as well, plus insurance companies. There are multiple sources now on B2B. And that's more interesting to us besides of B2C. In terms of demand-supply ratio, we already can sell five times more than we are able to source. In EU, however, this directive started from last year. Then that in EU, you only can sell EU-certified products, right? Not American, not Japanese, etc.
And what about worldwide licenses? Do you can global licenses? Can you sell it in Europe or?
What do you mean global licenses?
I don't know. For instance.
In EU, you're allowed to sell only EU-certified products.
Okay, okay. Understood.
But there are many other markets outside of EU.
Okay. Other questions? Other question regards I mean, I forgot the next questions. Oh, about the US entrance.
Do these retail shops that you opened are already profitable, or is it still?
They're not yet profitable. They're not yet opened.
Okay.
The first opening in the U.S., we plan in September of this year.
Okay. Will you have any support from your partner to open these shops, or it is on your side to fully finance this entrance?
We do have support. We work very close with each other.
Okay. Next question is about the startup portfolio. Could you give us some update on these investments? Are there some investments to be closed up, or I don't know, to cash out?
Serhei said it before that we have appointed a professional team of people that actually it is what they have been doing in their professional life, and they are helping us out with coaching, guiding into business plans, but also guiding through these companies to reach and get grants from EU funds and from other sources. Already, some of our investments, like I give you the example of EMBIO Diagnostics that we have invested in 2021 at the valuation of $6 million when we purchased 20%. Recently, they had another round at the valuation of $13 million, not from us, from other investors. So the majority of them, actually all of them, have very good things to show going forward. We are, for example, with RSL and Promed that they have entered and they started realizing their business plans.
They have significant revenues generated by markets that are quite strong in that bioscience. We have Clevetura entering into a final stage of full-scale development of new products. We have Blend Energy. Serhei said it before that is very close to getting grant for further development of their project. Plus, they are in discussions with other investors to get into their share capital at much higher valuation from what we have done. Generally, we admit that our investments actually, we are happy to say that none of our investments, it looks like a failure. Every investment we did and every company we have now together with us looks very promising. Now, what the result will be is quite premature because the majority of investments we did is now reaching second or third year, and we have five- to seven-year plans to get out.
But like I said, we do not have anything that worries us to see. What it was worrying us together with Serhei is our limited time to deal with them. That's why now we appointed the right professionals to do that on our behalf. So closing to that matter, we are seeing currently some good development from all these. Others closer to the exit, but others also further development.
Okay, thank you. I think.
So could you tell us what was the Breezy result last year and AROS ? And what do you expect for 2025?
Breezy was, I mean, in terms of revenue, it was somewhere about $50 million. If we are looking to AROS , it was very insignificant. It was closer to $5-$7 million revenue.
Now, if you're looking to see what impact they had in terms of financial result, AROS gave us, and I think we gave and we shared the number in quarter three. We had approximately $1.5 million of losses emanating from that. Breezy was very close to bringing a break-even, but they reinvested back into the company. Looking and because understanding that the question has a second question for this year, we do not plan any losses for none of the two business units this year. And all the plans that have been made, especially for AROS, remaining parts of the business are to say the least on a break-even basis. So we do not expect to have negative results from both these big projects of ours.
Thank you. And the second question, what will be your initial cost to enter the U.S.?
Do you expect it to be significant and visible in the results or not?
The leases, which is the biggest expense there, should be the rent, yes. And now, according to the new IFRS 16, this is considered now to be like a financial lease as opposed to rent. It is expected for the first year and for the three shops to have an initial investment of approximately $2-$2.5 million, including, I repeat, the leases. That's how we estimate it, and that's the plan we have to invest in this year to open these three shops. Understanding that we are opening a flagship store in West Hollywood between Chanel and Louis Vuitton.
Okay, thank you. And in case of the logistics there, do you expect to source from your current warehouses, or do you plan to open there some logistics?
I think it will be third-party logistics that will take care of that. I mean, opening more stores, making much bigger business might create a need for own logistics facilities, but for the time being, it will be third-party logistics providers.
Thank you. That's all from me.
Thank you.
Maybe just one last question. You mentioned some M&A potential. Is there something in the pipeline that could finalize this year?
Look, on that respect, many times we discussed it, and many times we said, yes, we are looking at our plate. Serhei once said that every week I get a new proposal on my plate, a new opportunity he wanted to mention. We are discussing, yes. We are exploiting opportunities. Now, we are not in a position to give any further details at this stage.
But what I can confirm is that there are good opportunities around us, which we finally get to see and enter into. But again, whatever we will do, it has to make sense for the business. We will not do anything either for the revenue or just to do it. We will do something which we will believe that it will add on either to a specific country or to a specific region, significant value for the group. We are in discussions.
How big are those companies like [Bitta] for example?
There is a variation of small, big. Small, from your perspective, is what? Small is, I don't know. Yeah. Let's say that mid-size.
Yes. J ust follow-up questions regarding M&As. Could you put some color on what would you be interested in in case of M&A targets?
Is it more the market that you would like to enter or new license agreements to broaden your offer or, I don't know, completely new areas of?
Let's say that it's not new markets, yes. We don't plan to enter new markets through acquisition and not completely new areas, like Serhei said. But you see, we are in almost every country of this region and further east. So what we are missing in specific countries is what we are targeting to get, meaning that if in Slovakia we don't have project business, we might seek to get someone in value added, which we have currently. But that's the underlying logic behind our opportunity checking that we will purchase or we will enter into an agreement with companies that have these products we don't have in specific markets or regions.
Okay.
And just the second chance with the questions which Martin asked, what is your budget for the M&A and in what respect it can affect your dividend policy?
The budget is correlated to the opportunity. All right? To the opportunity we see. We did not assign a specific budget for this specific purpose. At the end of the day, that's why there is lending, if necessary, to do any acquisition. This finance is always cheaper.
Okay, thank you.
One question.
AB they see the push on the margins in Slovakia and Czech. So can you tell us that you see some push in the other markets that you operate or how it looks like currently?
But AB first of all, I cannot speak for any other company. I'm not authorized or none of us is authorized to talk. However, we have to be more specific.
AB gave you this information in terms of what product line. You see, of course, AB has a big portfolio including Apple in this country, which we don't have. So we cannot compare and give you the same opportunities. I mean, there is generally push for margins everywhere, but it is a matter of money. I would like to tell you a few words about my history on working with the U.S. market. It means we were producing machinery and so on, and the general director found a potential customer in the U.S., Florida. So very often, he was delegated into Florida with some colleagues, engineers, and so on. And during these three years' trips, they never made any transactions. It is quite a very, very different market. It is very difficult. And I hope that.
That's why we go there with a partner that has been there and has been there successfully. However, we believe that we can do it better together. All right. Bang & Olufsen has been in the U.S. for many years. We are not entering a brand new market for them. But we have to.
Yes, we talk about it.
We have to call off the meeting because we have arranged already another meeting for 10 minutes late now. Thank you for warning. We know.
Every market is difficult.
All right. Thank you.
Thank you, guys. Thank you very, very much.