S&T: further growth for its IT systems business

Sale of proprietary manufacturing division - expansion of service provision area

S&T is a high-tech group headquartered in Linz, Austria. S&T has taken steps to sharpen its focus on being a provider of IT systems. This focus has caused this segment to grow in Germany, Switzerland, Austria and elsewhere. The focus has two thrusts. As of October, S&T will consign its production of proprietary brand PCs to another manufacturer of such in Austria. The other thrust is S&T's expansion in Austria of its supplying of business services. This expansion is being produced by S&T's securing of new clients and by its making of acquisitions in the areas of POS management and of computer centers.

In October, 2016, S&T will transfer its manufacturing of proprietary brand PCs - with these brands especially including the MAXDATA and Proworx ones - to the Vienna-based Omega Handelsgesellschaft m.b.H. The latter will pursue this manufacturing, which comes with great technological and logistic requirements. This move is being made for two reasons: to pursue S&T's focusing on its core business of providing IT systems, and to expeditiously induce a rise in the gross margins being achieved by the Services Germany, Austria and Switzerland segment.

Being carried out at virtually the same time is a further stepping up of S&T's IT systems business. This will take the form of acquiring corporate stakes and of making other moves designed to expand the POS management and computer center sectors. This will further enhance S&T's position of being the premium supplier in the areas of workplace and POS management. Thanks to this position, S&T is one of the very few companies capable of offering such services on an area-wide and 24/7 basis.

The transactions will not significantly impact upon S&T's cash on hand. Nor will it substantially affect the company's sales. This is due to the business volumes involved's offsetting of each other.

S&T's focus on the service provision business, which feature high margins, is to cause the gross margin achieved by the Services Germany, Austria and Switzerland segment in the first quarter of 2017 to increase from 23% to 27%. The transactions are set to cause the segment's profit to rise as of mid-2017 by some 2%.