Director not entirely satisfied despite record earnings - again!

The EET Group's recently published financial statements for 2013 show record earnings on operating profit and growth in both revenue and operating income (EBITA). Despite difficult market conditions within the fields of IT and consumer electronics, the group has succeeded, for the 12th consecutive year, in improving its results, delivering its best results in the group's 27-year history in 2013. And yet the director is not entirely satisfied.

The EET Group is Europe's largest distributor of surveillance solutions, spare parts and accessories for computers, printers, tablets and mobile phones. The company, which has its headquarters in Birkerod and a logistics centre in Ballerup, operates through 31 sales offices in 26 countries, employs almost 500 employees and serves more than 40 000 customers.

The core business is focused on four main business areas:

Parts and accessories for computers, printers, tablets and mobile phones, home entertainment and lifestyle electronics, surveillance and security solutions and POS and auto ID. The company sells a long list of leading brands in these core areas, and a total of 500 different brands and more than 600 000 item numbers are represented in the EET Group's range.

EET Group 2013:
Net revenue: DKK 1.573 mio (2012: DKK 1.427 mio)
EBITA: DKK 109 mio (2012: DKK 108 mio)
Equity: DKK 313 mio (2012: DKK 297 mio)

The profit speaks for itself

With net revenue of just under DKK 1.6 billion and operating profit from operating activities (EBITA) of DKK 109 million, the EET Group has once again turned out a growth in both revenue and earnings in 2013. The increase in revenue was achieved partly through acquisitions and partly through organic growth in a market that has been especially difficult for the core areas covering IT products and consumer electronics.

Speaking about the result, Group CEO John Thomas says: "The profit speaks for itself in a way. For the 12th consecutive year, EET has now seen an improvement in its operating income, which must be considered satisfactory in view of the current market conditions. But that said, I have to admit that I had hoped for a higher level of earnings than the DKK 109 million. I believe that we have developed our product portfolio significantly in recent years, and at the same time invested heavily in developing new business areas and concepts, but the return from this has yet to bring us the level I am looking for. I therefore consider the financial statement approved at an acceptable level, but there is still room for improvement."

Acquisitions in 2013

In March 2013, the EET Group acquired the activities "Digital TV" and "Living" from the Danish company Kjaerulff 1, to strengthen its product portfolio in the field of home entertainment and lifestyle electronics, one of the group's four core business areas. In September 2013, the EET Group took over activities from the Austrian cable distributor Kaminek, and in December 2013, it acquired a majority stake in Clint, a Danish manufacturer of digital A/V products.

Winning in a difficult market

"Our market success is attributable to several factors," says Group COO Claus Ring. "Our main focus is on creating value for our customers, and we do this by ensuring them the industry's best 'one-stop shop' concept with probably the best product availability in our core business areas in Europe. What's more, we constantly focus on optimising our processes for the benefit of our customers, for example via e-trading, a number of unique sales tools and, above all, with our highly competent staff, who ensure that our customers always enjoy a positive experience when they shop at EET. It sounds easy, but it requires focus every single day."

In recent years, the EET Group has held an annual international training course for young aspirants from all over Europe, who are offered targeted internal training in the group's specialist fields. The trainee programme is aimed at ensuring that, despite its rapid growth, the group has an organisation that possesses the best skills in the market at all times and can thus offer its customers the best possible service.

Analyses in recent years show the EET Group to have been among the top companies in the industry when it comes to creating the most jobs.

In 2013, the EET Group established additional greenfield start-ups in a number of east European countries, including the Baltic States, Hungary and Romania. Thus, the group currently has sales offices in 31 countries in EMEA (Europe, Middle East & Africa). The local sales offices are being established to meet the needs of the manufacturers, who prefer a local distribution set-up. To put it simply, distributors should preferably be global, but act local. The ability to do this was one of the main reasons that Sony, for example, chose the EET Group as its European parts distributor in 2013.

Tremendous growth potential

Thomas has no plans to change down a gear. Not when it comes to the pace, ambitions or expectations for this year's result. "We still have lots of areas where we can grow the business. In recent years, for example, we've introduced a number of new business areas which have only achieved a limited market share as yet, and therefore represent considerable growth potential. In business areas such as 'surveillance and security' and 'POS and auto ID' in particular, we have pretty ambitious expectations when it comes to growth. Both of these business areas have already shown great development in 2013, and I am confident that this will continue."

When asked directly whether further acquisitions are in the pipeline, Thomas replies: "We have undertaken more than 20 acquisitions during my time as director, the latest in January 2014 when we invested in the British distributor, EAF Supply Chain, which has 80 employees. We are aiming for two to three acquisitions a year, which corresponds to what we did in 2013. However, the important thing is for us to continue to be able to generate organic growth that exceeds general market growth - and this means taking market shares every day."

Finally, the CEO answers the question of where the growth limit lies: "Two years ago, we proclaimed that within a few years we would achieve a level of revenue of DKK 1.5 billion, and we have now more than met that target. Our next goal is to exceed DKK 2 billion. However, this should only be seen as a staging post on the road to DKK 3 billion, as there is still a great deal of untapped potential in both the market and our company. So I cannot give a precise answer to that question."