Proact UK rocked by delivery delays in Q4 results

Strong performance in cloud and services business was not enough to power the Swedish group to growth in its Q4 or full-year sales figures

Proact claims that delivery delays are behind a dramatic decline in its Systems sales in the UK as chip shortages continue to affect the business on a pan-European level.

UK revenues tumbled by 19 per cent year on year, and organically by 16 per cent, for the Swedish reseller in Q4 to SEK 131m (£10.46m). The decline was driven by a 42 per cent year-on-year drop in so-called "System" revenues to SEK 49m, which Proact claims was a result of delivery delays linked to ongoing chip shortages.

Adjusted EBITDA for its UK business also saw steep declines, falling 73 per cent to SEK 3m as a result of lower System sales.

Services revenues fared substantially better, with UK sales up eight per cent to SEK 82m during Q4, with support revenue growing by eight per cent to SEK 27m and cloud services revenue growing by five per cent to SEK 47m.

For the full year ending December 2021, UK sales grew by four per cent to SEK 630m, thanks to a nine per cent increase in services revenues to SEK 321m while System sales decreased by one per cent to SEK 309m.

On a group level, Proact's revenues decreased by four per cent in Q4 to SEK 982m, driven by a 16 per cent drop in Systems sales to SEK 516m, and organically by 24 per cent. Adjusted EBITDA fell by 14 per cent to SEK 56.9m. The declines translate to narrower EBIT margin of 6 per cent - down from 6.8 per cent the previous year.

Despite the shortfalls in Q4, CEO Jonas Hasselberg said Proact enters 2022 in a strong position.

"During the fourth quarter we have seen a higher demand in the systems business than earlier under the year," Hasselberg said.

"However, revenues were significantly affected by delivery delays at several of our suppliers."

Hasselberg explained that although Proact saw "a certain impact" of semiconductor shortages earlier in the year, it wasn't until December that the group experienced a significant effect on large parts of its offering within storage and networking products.

"We are thus entering 2022 with a larger backlog than normal and a good underlying demand, which leaves us well positioned for the coming year," he added.