Exertis blames “one large supplier” as profits almost drop in half, buys French distie CUC

UK tech distributor Exertis has made yet another acquisition, however it has seen operating profit fall from £15.2 million to £8.6 million year-on-year during the six months ending September 30th 2015.

It blamed the fall on "reduced sales of products of one large supplier".

Exertis has made an offer to aquire CUC Groupe, a cabling and connectors distribution business headquartered near Paris. The company employs 192 people and and has annual revenues of approximately €60 million.

CUC sells a broad range of cabling products to over 9,000 customers (resellers, systems integrators and electricians) from its operations in France and Germany.

"The acquisition, which is expected to be completed in the final quarter of the financial year, will add specialist expertise in cabling and connector products and significantly broaden the customer base of the Continental European business," said Exertis in a statement.

The news comes after Exertis acquired Computers Unlimited earlier this year and Swedish tech distributor CapTech last year. 

It means the big continue to get bigger, and the trend of market consolidation in the UK tech distribution sector continues.

It also means Exertis has spent £16.4 million in acquisitions during the six months ending September 30th 2015. Capex stood at £16.3 million during the period, bringing Exertis’ overall expenditure to £32.7 million overall during the half-year period.

Elsewhere, Exertis’ operating profit fell from £15.2 million in 2014 to £8.6 million this year, during the same period.

This is a drop of 43.6 per cent year-on-year, and makes Exertis the only company in parent DCC’s portfolio to have posted a decline in profit in this period (DCC’s divisions include DCC Energy, DCC Healthcare, DCC Environmental and DCC Technology, also known as Exertis).

UK revenue at Exertis also fell by approximately eight per cent during the same board, however, overall revenue (including from other territories) rose 4.9 per cent, reaching £1.08 billion.

Exertis said it saw "significant decline in profitability due to weak performance of UK business", as the UK "continued to be impacted by reduced sales of products of one large supplier".

It said it also saw weaker than anticipated demand in the market for tablet, smartphone and gaming products.

"Operating margin in UK impacted as costs typically fixed in nature in the short term and activity significantly weighted towards second half," it added, saying it had seen good growth in Continental Europe, benefitting from strong performance in Sweden.

Exertis added that its commitment to acquire CUC in France/Germany will "further broaden its base of the business in Europe".

Exertis has also begun construction of a new 450,000sq ft UK national distribution centre in the North of England, close to the majority of its existing facilities.

"The project is progressing well and the relocation to the new facility will take place on a staged basis, beginning in the second half of the year ending 31 March 31st 2017", Exertis said in a statement.

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