What is Growth Strategy and Future Prospects of ALSO Holding Company?

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What is the growth strategy and future prospects of ALSO Holding?

Founded in 1984, ALSO Holding AG has evolved from a trading hub for IT products into a significant European technology provider. Its core mission has always been to streamline operations for its partners, focusing on logistics, financial transactions, and credit control. This foundational commitment to efficiency has been a driving force behind its sustained expansion and market influence.

As of 2023, ALSO commands an impressive market share of approximately 10% within the European IT distribution sector, demonstrating its substantial reach and impact. The company's operational footprint extends across 30 European countries, with an additional presence in 144 countries through its Platform-as-a-Service (PaaS) partners, highlighting its global ambition and capability. This extensive network is a key component of its overall growth strategy.

The company's business growth ALSO Holding has been significantly bolstered by its focus on cloud and digital transformation solutions, which are in high demand. In 2024, ALSO reported sales exceeding €12 billion, a testament to its successful adaptation to market trends. A major development in its growth strategy development was the acquisition of Westcoast, a prominent UK ICT provider, which was approved in February 2025. This strategic move is expected to create the largest technology provider in Europe, with Westcoast contributing approximately €4.2 billion in revenue from its 2024 operations in the UK, Ireland, and France. This partnership is a prime example of ALSO Holding's market expansion strategy.

Looking ahead, ALSO Holding's future prospects are intrinsically linked to its ambitious expansion initiatives and a forward-thinking innovation and technology roadmap. The company is actively pursuing strategies for increasing ALSO Holding revenue by leveraging technology growth ALSO Holding and embracing digitalization strategy ALSO Holding. Understanding the company's market position and strategic advantages is crucial, which can be further explored through an ALSO Holding BCG Matrix analysis. The impact of technology on ALSO Holding growth is undeniable, driving its long-term vision for the company.

The growth strategy ALSO Holding employs is multifaceted, focusing on both geographical expansion and deepening its product and service portfolio. This approach aims to solidify its position as a leading technology distributor and service provider across a wider international landscape.

A key element of their business growth ALSO Holding is pursuing is entering new territories. In 2023, the company successfully established a presence in Spain, Portugal, and Italy, marking significant steps in its global ambitions. Furthermore, they have been actively strengthening their foothold in Eastern Europe and the Nordic countries, indicating a strategic push into diverse European markets.

The company's commitment to technology growth ALSO Holding is evident in its substantial investments in digital platforms. These include subscription-based cloud services, as well as solutions for the Internet of Things (IoT), cybersecurity, virtualization, and Artificial Intelligence (AI). The robust performance of these digital offerings, particularly in cloud and AI, was a significant contributor to their financial results in 2024.

Geographical Expansion

In 2023, ALSO Holding expanded its international reach by entering Spain, Portugal, and Italy. The company also reinforced its presence in Eastern Europe and the Nordic region, demonstrating a clear strategy for broader market penetration.

Strategic Partnerships

A major development in 2024 was the partnership with Westcoast Ltd., a prominent UK ICT provider, finalized by February 2025. This collaboration is set to enhance ALSO's market standing in the UK, Ireland, and France, leveraging shared growth ambitions.

Digital Platform Investment

Significant capital is being directed towards high-growth digital platforms, including cloud services and AI. These areas are crucial for the company's future business opportunities for ALSO Holding, driving revenue and user engagement.

Acquisitions and Integrations

The acquisition of SWS a.s. in August 2024 and the preliminary agreement with Datamatic in Italy in February 2024 are key steps in diversifying offerings. These moves are part of a continuous effort to bolster market presence and product capabilities.

Key Growth Drivers

The company's digital transformation strategy ALSO Holding is yielding strong results, with cloud sales alone reaching €1.133 billion in 2024, a growth of 31%. This performance underscores the success of their focus on digital solutions and expanding their ecosystem through strategic acquisitions.

• Cloud sales growth of 31% in 2024.
• Expansion into Spain, Portugal, and Italy in 2023.
• Partnership with Westcoast Ltd. to strengthen UK, Ireland, and France presence.
• Acquisition of SWS a.s. and agreement with Datamatic to enhance market offerings.
• Continued investment in digital platforms like AI and IoT.

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The company's approach to innovation and technology is central to its growth strategy, aiming to stay ahead in the dynamic ICT sector.

Significant investments in research and development are a cornerstone of this strategy, ensuring the development of advanced solutions and services.

This focus on technological advancement is designed to meet evolving customer needs and create new avenues for business growth.

R&D Investment

In 2023, the company allocated €5 million to R&D, with a Q3 2023 investment reaching €50 million. This funding is directed towards advanced technology solutions and cloud services.

Innovation Lab

The 'ALSO Innovation Lab' actively fosters collaboration with startups and technology partners. This initiative has led to the creation of innovative products, such as cloud computing solutions that contributed to a 15% year-over-year increase in additional revenue.

Digital Transformation

The company is committed to digital transformation and automation, integrating cutting-edge technologies across its operations. This includes a strong focus on subscription-based cloud offerings and digital platforms.

Service Division Focus

The Service division is centered on cloud offerings and digital platforms for IoT, cybersecurity, virtualization, and AI. The robust performance of these digital platforms was a significant contributor to the company's 2024 financial results.

AI Integration

In January 2024, the company announced the availability of Microsoft Copilot for MS 365, enhancing channel capabilities with AI. This move underscores the company's strategy to leverage AI for business growth.

Sustainability Commitment

The company is dedicated to sustainability, aiming for a 30% reduction in carbon emissions by 2025. By 2023, a 22% reduction from 2020 levels was achieved. A planned solar panel initiative for 2024 is expected to generate 1,000 MWh of renewable energy annually.

ESG Integration and Financial Performance

The integration of Environmental, Social, and Governance (ESG) priorities into the company's strategies has demonstrably contributed to positive environmental outcomes and financial outperformance. This holistic approach to business growth aligns with the long-term vision of the company and its stakeholders, including Owners & Shareholders of ALSO Holding.

• Focus on advanced technology solutions and cloud services.
• Collaboration with startups through the 'ALSO Innovation Lab'.
• Digital transformation and automation initiatives.
• Expansion of subscription-based cloud offerings and digital platforms.
• Commitment to sustainability and carbon emission reduction targets.
• Integration of ESG principles into overall business strategy.

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The financial outlook for ALSO Holding AG is robust, characterized by a history of strong performance and clear objectives for sustained business growth. The company achieved a significant milestone in the fiscal year ending December 2023, reporting record revenue of €12.5 billion, which marked a 10.4% increase compared to the previous year. This impressive revenue growth was accompanied by a net profit of €240 million and an operating margin of 1.9%.

Preliminary results for 2024 indicate continued financial stability, with revenues holding steady at approximately €11.0 billion. During this period, the company projected an EBITDA between €230 million and €240 million, alongside a Return on Capital Employed (ROCE) ranging from 28% to 31%. These results were achieved despite facing headwinds from unfavorable foreign currency movements and investments made to support future growth initiatives, particularly within its digital platforms focusing on cloud, artificial intelligence, and cybersecurity, which demonstrated particularly strong performance.

The company's strategic vision extends to 2025 and beyond, with an EBITDA guidance set between €285 million and €325 million, and an anticipated ROCE exceeding 17%. Looking further ahead, over the next 3 to 5 years, ALSO Holding AG aims for even more ambitious financial targets, projecting an EBITDA of €425 million to €525 million and a ROCE surpassing 25%. This forward-looking financial strategy is supported by a substantial cash balance of around €731 million. This strong financial position also enables the company to propose its 13th consecutive dividend increase, with a proposed CHF 5.10 per share for 2025. Analysts, including those at UBS Global Research, foresee a re-acceleration of revenue growth in 2025, with projections indicating a 46% increase in FY2025 revenue, largely attributed to the consolidation of Westcoast, with organic growth expected to contribute around 8%. Furthermore, the company plans to execute additional share buybacks valued at €120 million, underscoring its confidence in its financial health and future prospects, a testament to its effective growth strategy.

Revenue Growth Trajectory

In fiscal year 2023, ALSO Holding AG achieved a record revenue of €12.5 billion, representing a 10.4% year-over-year increase. This upward trend is expected to continue, with projections for 2025 indicating a significant re-acceleration in revenue growth.

Profitability and Margins

The company reported a net profit of €240 million for 2023, with an operating margin of 1.9%. For 2024, the projected EBITDA is between €230 million and €240 million, demonstrating a commitment to maintaining strong profitability.

Return on Capital Employed (ROCE)

ALSO Holding AG aims for a ROCE between 28% and 31% in 2024. Looking ahead to 2025, the target ROCE is set to exceed 17%, with long-term goals aiming for over 25% within 3 to 5 years, reflecting efficient capital utilization.

Financial Strength and Shareholder Returns

A record cash balance of approximately €731 million underpins the company's financial stability. This strength supports the proposed 13th consecutive dividend increase to CHF 5.10 per share for 2025 and planned share buybacks worth €120 million.

Digital Platform Performance

Digital platforms, including cloud, AI, and cybersecurity, are key drivers of ALSO Holding's growth strategy, showing particularly strong performance in recent financial periods.

Analyst Outlook

UBS Global Research anticipates a significant revenue increase in 2025, driven by consolidation and organic growth, highlighting positive external validation of the company's future prospects.

Long-Term Financial Goals

The company has set ambitious long-term targets, aiming for an EBITDA between €425 million and €525 million and a ROCE exceeding 25% within the next 3 to 5 years, showcasing a clear vision for sustained business growth.

Share Buyback Program

The planned €120 million in share buybacks demonstrates management's confidence in the company's valuation and its commitment to enhancing shareholder value as part of its overall growth strategy.

Dividend Policy

The proposed 13th consecutive dividend increase to CHF 5.10 per share for 2025 reflects a consistent commitment to returning value to shareholders, supported by the company's strong financial performance.

Strategic Investments

Despite incurring expenses for future growth, the company maintained stable revenues in 2024, indicating that strategic investments are being managed effectively to support long-term business growth and technology advancement.

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The company's growth strategy, while ambitious, is not without its potential pitfalls. Intense competition within the ICT distribution sector demands constant vigilance and innovation to secure and expand market share. The rapid pace of technological advancement means that significant investments in research and development are crucial to ensure product and service relevance, a challenge that is becoming more pronounced as global R&D spending saw increases in 2024.

Furthermore, vulnerabilities in the supply chain pose a substantial risk, particularly for a major distributor of IT hardware. Disruptions such as semiconductor shortages, which experienced price hikes in 2024, coupled with logistical issues like port congestion and escalating shipping costs, can impede timely deliveries and inflate operational expenditures. Geopolitical instability, including potential conflict escalations and trade policy uncertainties anticipated through 2025, further exacerbates these supply chain risks.

Cybersecurity threats represent another critical area of concern, given the company's deep reliance on digital infrastructure. The global cost of cybercrime is projected to reach $10.5 trillion annually by 2025, highlighting the significant financial and operational risks associated with breaches. Additionally, navigating increasingly stringent data privacy regulations, such as GDPR, presents compliance challenges that could result in substantial financial penalties and reputational damage if not managed effectively. To counter these threats, the company is focusing on diversifying its ecosystem, strengthening vendor relationships, and implementing robust data protection measures, alongside thorough ESG due diligence for acquisitions.

Market Competition

The ICT distribution industry is highly competitive. Continuous adaptation and innovation are essential to maintain market position and achieve business growth.

Technological Obsolescence

Rapid technological changes necessitate ongoing R&D investments. Keeping offerings current is vital in a fast-evolving market.

Supply Chain Disruptions

Shortages of critical components like semiconductors and logistical challenges can impact delivery times and costs. Geopolitical events add further uncertainty.

Cybersecurity Threats

Reliance on digital infrastructure makes the company vulnerable to cyberattacks. The projected global cost of cybercrime underscores this risk.

Regulatory Compliance

Non-compliance with data privacy regulations can lead to severe financial penalties and reputational damage. Staying updated on evolving laws is critical.

Geopolitical Uncertainty

Trade policy shifts and potential conflicts can disrupt international operations and supply chains. Monitoring global events is crucial for risk mitigation.

To navigate these challenges and support its growth strategy, the company is actively implementing several mitigation tactics. These include broadening its ecosystem of partners and suppliers to reduce reliance on single sources, thereby enhancing supply chain resilience. Strengthening relationships with key vendors is also a priority to ensure better access to products and favorable terms. Furthermore, significant investments are being made in advanced data protection protocols and cybersecurity measures to safeguard its digital assets and customer data. The company also emphasizes robust ESG due diligence in its acquisition processes, aiming to integrate businesses that align with its sustainability and ethical standards, which can indirectly reduce operational and reputational risks.

Ecosystem Diversification

Expanding the network of partners and suppliers reduces dependence on any single entity. This strategy is key for supply chain stability and achieving business growth.

Vendor Relationship Management

Cultivating strong ties with vendors ensures preferential access to products and services. This is vital for maintaining inventory and meeting customer demand, supporting the company's technology growth.

Data Protection Investment

Implementing advanced data protection protocols and cybersecurity measures is essential. This protects sensitive information and builds customer trust, crucial for digital transformation.

ESG Due Diligence

Thorough ESG due diligence in acquisitions helps integrate responsible practices. This approach can mitigate long-term operational and reputational risks, aligning with the Competitors Landscape of ALSO Holding.

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