In the Dienas Bizness daily newspaper of 30th March, 2009, an interview was published with ELKO Group president, Egons Mednis, containing the following information:

 

ELKO Group is reviewing the company’s financial performance on a regular basis and this year, taking into account the positive development scenario, it is expecting to achieve the 505.7 million LVL turnover that was reached last year. ”The industry does not stand still; nevertheless, I don’t want to promise revolutionary changes over the next two years”, states Egons Mednis, ELKO Group president.

 

 

This was revealed to Db by the IT field leader and president of Latvia’s biggest enterprise (TOP 500), ELKO Group, Egons Mednis.

In 2008, ELKO Group operated with an unaudited turnover of 506 million LVL, which is 3.7% less than in 2007, when the company achieved a turnover of 525 million. Db has already reported that it was just at the end of 2007 that the enterprise managed to exceed a turnover of one billion USD and that in that year it also achieved an outstanding 47% increase in turnover. In turn, the company’s consolidated earnings in 2008 were 5.25 million LVL.

Currently, ELKO Group, which distributes IT components and solutions, operates in 9 countries with 14 agencies.

 

“In the Baltic States the situation is not the worst but it is still quite difficult; in the first six months of last year the results were still fine, but, during the second part of the year the decrease began and the results were 20% less than expected. This year the fall in turnover in some segments has even reached 30-50%”, explains the ELKO Group president. He wants to draw attention to the fact that the most difficult situation is in Ukraine where the amount of sales in certain segments is only one third of that in previous periods.

However the most rapid fall is in Russia. An interesting situation is also being observed in the development of markets in Eastern European countries such as Slovakia and Slovenia, where a significant profit comes just from export; but France, for example, has announced that it is going to close its factories there and will transfer them back to France. In turn, Croatia and Romania have huge problems with payments – Croatia being one of the leaders in terms of delayed payments; however, the drop in sales of IT components and solutions there is not as dramatic as in other places. “Each country has its own specific problems and issues but with regard to the IT market there is a significant fall everywhere – varying from 20 to 50%. Nevertheless we are not giving up the struggle and are hoping to see the stabilization of the situation”, stressed Mr. Mednis. Although a drop in business can be seen in all regions, ELKO Group is not currently planning to leave any of the markets entered. “No options are being excluded but the opposite move might also be considered — to enter markets in other countries. In any case, it might be one option to be analyzed in order to compensate for the decrease in other markets. All options are being reviewed, but, for the time being no decisions have been made or solutions found regarding this issue”, explained the ELKO Group president. He also revealed that discussions are taking place regarding opportunities for collaboration but that this information is not being disclosed.

 

“Products are being sold at discounts but the new models of IT components and solutions are going to be a little more expensive and these discounts won’t apply to them. However, if the market begins to recover a shortage could occur and this would be reflected by the increase of prices”, indicated Mr. Mednis. This could range from 3-5%, but for certain product categories it could even reach 10%. In the computer market the average increase in prices could reach 5%.

 

Quite significant players are disappearing from the market in Latvia and the Baltic States, some of which were among the pioneers of the IT industry. “Changes are taking place, and the merging of companies can be expected as well as the establishment of new enterprises and the withdrawal of existing participants from the market”, admitted Mr. Mednis, stressing that the industry does not stand still, but he does not want to promise revolutionary changes over the next two years.

 

ELKO Grupa JSC was founded in 1993. It is Latvia's biggest enterprise and since 2007 has operated with an annual turnover of greater than one billion USD. The main operational direction of the enterprise is the wholesale trade of computer engineering and electronic goods in the Baltic States, Central and Eastern Europe and CIS countries.

 

The enterprise presents more than 80 producers and sells their goods to approximately 6300 retailers, local providers of computer engineering solutions and system integrators. ELKO Grupa offers more than 9000 product names from the world's most famous suppliers – Acer, Intel, Seagate, Samsung, Sony, TomTom, Western Digital and others. Currently, there are more than 340 people employed in the enterprise. ELKO Grupa JSC is owned by several private persons, as well as by IT Investīcijas JSC, Amber Trust investment fund and investment funds related to East Capital Asset Management.