Distribution Central hits record $5.9 million profit

Sydney-based Distribution Central has achieved its largest-ever revenue and as well as a record after-tax profit of $5.9 million for its 2014 financial year.

Post-tax profit jumped by more than $5 million for the year ending 30 June 2014, up from $299,551 the year before.

Consolidated revenue also increased more than $20 million to $275.8 million, up from $252.3 million the year before.

Managing director Nick Verykios told CRN that one factor contributing the the success was increased technical collaboration between vendors. Technology transfers between the different vendors is leading to a flow-on effect as customers of one vendor gravitate towards complimentary solutions from another.

“I’ve got the Aruba customer base who is now interested in Palo Alto because of reference architecture they’ve put together and visa-versa,” Verykios said.

This flow-on extends is seeing opportunities driven by DC’s unified communications and networking unit in the security unit, for example.

“I’ve got good opportunities with Extreme [Networks] customers for Palo Alto and visa versa, because of the tech transfers,” he said. “This is an interesting wave at the moment we can really tap into.”

The trend is creating more opportunities for Distribution Central to step in and help turn those architectural designs into a bill of materials and transaction opportunity for resellers.

“We’re doing proof of concepts with some of these vendors on behalf of the resellers,” he said. “[Resellers are] offloading their proof of concept to us, because it’s a substantial cost.”

The strongest DC business unit was Vivid Systems, which saw pre-tax profit jump to $4.4 million, up from $908,126 the year before. The business unit was formed by the amalgamation of the company’s networking and unified communications businesses.

Security was another strong money-earner. This segment saw a $2.4 million pre-tax profit in 2014, compared with a loss of $373,389 the year earlier.

Pre-tax profits from Distribution Central’s New Zealand business also improved, increasing to $1.1 million from $144,345 the year before.

For the first time DC now also offers “unbundled” channel services not attached to any vendor it represents.

The distributor has continued filling out its data centre offerings, adding Sandisk recently, as well as earlier adding Fujitsu Eternus, Simplicity and eVault to the roster. At August this year, NetApp reportedly made up 28 percent of the entire business.

The data centre unit is still the greatest revenue earner in the company, followed by the Vivid and security units.

Distribution Central operates in Australia, New Zealand and Singapore and has more than 120 employees.

Following a year packed with awards – Verykios was named IT Executive of the Year by CEO Magazine in 2013 and chief executive Scott Frew received recognition at the Pearcy Foundation’s NSW 2013 ICT Entrepreneur of the Year, while the company was No. 31 in the BRW 50 Best Places to Work in 2013 - Verykios said he is now finding himself being approached to consider opportunities for Distribution Central outside the traditional IT sphere.

“We’re getting a lot of companies coming to us and saying, ‘Why just IT, why not do what you’re doing in medical or the finance sector? A lot of your methodologies apply to other industries.’”