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February 25, 1997updated 05 Sep 2016 12:51pm

EUROPEAN DISTRIBUTION MARKET SALES BOOM BUT MARGINS ARE THIN

By CBR Staff Writer

Times are good in the European distribution market, according to a new report from market research house PC Europa, part of the Passant Publishing Corp of Colchester, UK. Distributors in Europe, The Top 800, reveals that there was a sales boom for Europe’s top 20 distributors last year, with an organic growth of around 37% – though this figure was lifted to an average of 59% due to acquisitions, particularly CHS Electronics Inc’s acquisitions of Merisel Inc Europe (CI No 2,989) and Frank & Walter Computer GmbH at the end of the year. This boosted CHS Europe to second place in the chart, withrevenues of $3.17bn, behind Computer 2000 AG, which achieved $4.25bn revenues in Europe last year. Three companies, Greek components distributor Karma-Oktabit at number seven, Target International of the Netherlands at number 14, and the UK’s Azlan Group Plc at number 17, doubled their sales last year, mainly through organic growth. According to the report’s editor, Max Hotopf, the high organic growth reflects the way large vendors are off-loading logistics on to distributors – Cisco Systems Inc and Siemens Nixforf Informationssysteme AG for example are committed to pushing huge sales volumes through two-tier distribution, and IBM Corp recently decided to push its RS/6000 line through distributors, setting up a pan-European agreement with Ingram Micro Inc, billed as the biggest computer distributor in the world, though only number three in Europe. Despite the sales boom, margins remain cut throat, with Computer 2000, CHS and Macrotron AG at number six all recently reporting after-tax profits of around half a percent of sales on their European operations. Of the 800, 52 companies had sales of more than $100m, and 189 with sales of over $50m, showing that the smaller players haven’t all been driven out of the market by the giants. The top three distributors together accounted for a quarter of the European wholesale market, which totalled $40bn in 1996.

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