Exclusive Networks breaches €500m revenues in first-half

Pan-European VAD posts 60 per cent revenue rise for first six months of 2016

Acquisitive France-based VAD Exclusive Group has posted a 60 per cent year-on-year increase in sales to €575m for the first half of 2016.

The group - the chief trading arm of which is security and networking VAD Exclusive Networks - claims its Nordic business achieved 90 per cent annual growth, with Sweden and Finland being the star performers. Elsewhere, its southern European business swelled by 40 per cent and France and Africa posted a 30 per cent bump in sales. Exclusive does not disclose profits.

Barrie Desmond, chief operating officer at Exclusive, said: "When you get an exceptionally high level of growth like we have had in the Nordics, it is usually down to some odd single event. We have signed some big deals in the Nordics compared with previous years. We signed some vendors [in the Nordics] that other distributors would not touch. Without those vendors I think we would have still achieved something like a 50 per cent increase.

"We got lucky and signed some of these bigger global deals which would have historically bypassed us because people thought we couldn't do it."

Desmond put the firm's 40 per cent year-on-year sales increase in southern Europe down to the addition of more premium services in the region.

"We have the right people; the team down there is excellent. Services have developed in Spain, Italy and Turkey - we had good growth in Turkey after we followed their renaissance as a more manufacturing economy," he said.

"Every region has seen growth, some regions have seen unbelievable growth; some have seen way above 30 per cent. Some regions have had marginal growth but still much better than [that] seen from most distributors."

Desmond said the UK has seen a 25 per cent boost in its year-over-year sales for the first half of this year, despite complications caused by Brexit.

"The UK has grown really well; it was tough by our standards and a shame that it was not 30 per cent growth like other regions. We did have a bit of a blip with Brexit. The blip was more around the perception rather than the reality of Brexit, but our business in July and August in many respects normalised; we are continuing the trend," he said.

"From a UK perspective we were able to sustain our pricing when all other distributors raised their prices. Post-Brexit the main trouble was currency. The business is still there and we are very confident about the business for the rest of the year."

Plugging the gaps
Desmond said the firm still has some work to do in filling out some of its European territories.

"We still have gaps in our geographical situation where we have to go out and maybe acquire in some markets. There are some markets that are not yet at a critical mass and maybe some acquisition targets in our European markets. We have a full-time M&A department based in Paris working on that," he said.

"Some other regions in the Nordics could be of interest to us, and in DACH we need to build out in some further regions. We could get there through organic growth but we need to look at whether we can get to that critical mass sooner through acquisition or whether to go about it organically.

"Everybody singles out that we are not in the American market but the Americans do not understand our method of distribution. When we go to the Americas we will do it in a different way; we might launch as a sales division only."

Numerous distributors, including Ingram and Avnet, have taken to shifting departments such as payroll, HR and customer service roles to centralised facilities in central and eastern European countries. Ingram closed its regional headquarters in Brussels and filled a service centre in Sofia, the Bulgarian capital, with 800 staff.

According to Desmond (pictured right), Exclusive will never consider shifting departments to lower-cost regions.

"No, we need to be as local as we can. When you lose that localisation in the market, you lose the ability to provide a value-based business model. Part of what makes a good distributor is being able to quote quickly and accurately - [other distributors] have got that wrong so many times," he said.

"When they move the back office they are out of touch with the dynamic and agile nature of the business. In the UK we have a two-hour turnaround for quotations. Our people come to us not only because we are good sales guys but because we can turn around quotes timely and accurately."

The Exclusive Group consists of cybersecurity and networking VAD Exclusive Networks, software-defined networking (SDN) infrastructure distributor BigTec, and services organisation ITEC, as well as leasing provider Exclusive Capital.