'Solid' EMEA performance narrows Systemax's Q1 losses

Sales at EMEA tech operations - home of Misco - jump 10 per cent annually

A strong performance from Misco helped parent Systemax narrow its losses in the first quarter as the UK VAR claimed its Budapest back office is paying off.

For the three months to 31 March, Systemax's sales shrank 0.8 per cent – 2.1 per cent in constant currency – to $873.4m (£519.54m) while its net loss narrowed to $3m, compared with $6.3m a year ago.

The firm claims the year is off to a "solid start" thanks to its B2B operations enjoying a sales spike: its EMEA technology division, including reseller Misco, saw sales jump by 10 per cent year on year and gross profits climb 13 per cent over the same period.

Its Industrial Products Group's revenue grew 22 per cent annually but its consumer business dragged the company down after sales slumped 21.8 per cent annually.

Earlier this year, CRN revealed that Misco was rumoured to be in talks to buy Phoenix IT's Cisco break-fix business. Although the firm did not confirm the move specifically on its earnings call today, its chief executive Richard Leeds did say its UK business had enjoyed significant investment in its Cisco capabilities.

"In a continued effort to enhance our strategic position within EMEA, we've recently added a team of high-level Cisco certified engineers, sales experts, and technical support personnel in the UK," Leeds said on the call, transcribed by Seeking Alpha.

Leeds added that Systemax's Budapest back-office facility – which it moved into last year and employs 300 staff – is beginning to bear fruit.

"We still have work ahead of us, but we see that the fruits of our labours are paying off there," he said. "Operations at our shared-service centre in Hungary continue to ramp [up and] we remain pleased with the initial results."

Despite hailing a good start to the year, Leeds admitted more needs to be done before Systemax begins to turn a profit.

"Additional improvement is required and we remain disciplined in the management of this business with a strong focus on regaining profitability," he said. "In summary, we're expanding our already-profitable B2B businesses, [and] are working diligently to re-establish a profitable consumer business.

"We are benefiting from the outstanding performance of our Industrial Products Group, and we see a number of growth opportunities for our B2B technology operations in both EMEA and North America."