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December slowdown undermined Q4
The past few weeks of the year had an impact on the performance of distributors across Western Europe
A slowdown in the fourth quarter hit growth across European distributors, with the last few weeks of December 2022 taking their toll.
According to numbers from Context, Q4 had been going fairly well, with year-on-year revenue growth of 4.9% in October and 3.8% in November, before December’s 4.3% decline hit growth numbers.
As a result, Western distributors closed out the fourth quarter looking at 1.1% growth, with issues in the personal systems market one of the main causes of the slowdown.
The tale of the quarter was an increase in value sales (up 13.1%), compared with a 7.1% decline in volume sales. Hardware sales also continued to decline, although ASPs increased, which meant revenues were flat.
Specifically, notebooks and headsets were hit, but servers, switches and wireless access points enjoyed rising average sale prices. “The variance between our Q4 forecast and actual performance can be explained in large part by the figures for personal systems, a sector which accounts for over a fifth of revenues through distribution,” said Context global managing director Adam Simon.
The analysis of the performance across the continent revealed a patchy picture, with some countries suffering notable shortfalls on expected revenue growth.
“Some countries also under-performed versus our expectations, with Germany, Poland, the Nordics and the rest of Europe all slowing down considerably,” he said, adding that it would be investigating the causes of that in more detail over the next few weeks.
PC sales figures
The mood music across the channel changed towards the end of the year. Although there have not been many publicly stated results for Q4, the indicators that have emerged so far – namely PC sales figures – have shown a shift in customer behaviour towards more cautious spending.
Some sources have reported that although projects are lengthening the market, dynamics remain largely unchanged from last year and optimism remains.
Claire Trachet, CEO and founder of business advisory Trachet, said there were signs the UK economy was going to get through the current challenges.
“From what we have seen so far in 2023, it’s clear there is great potential for the market to stabilise faster than expected,” she said. “Interest rates are set to decrease, and inflation could begin to subside, which would reduce a level of uncertainty in the market that has been problematic for investors and dealmakers.
“Having had to navigate a turbulent period over the past year, the UK is now filled with a host of resilient startups that I expect could attract the attention of investors – both domestic and globally – in 2023,” said Trachet.
