**Logicom Sales Decline Amid Weaker Activity in Key Markets**
Logicom Public Ltd has reported a significant decline in profit attributable to shareholders for the first quarter of 2026, with profits falling by 55.2% to €10.7 million, down from €23.9 million in the same period last year. This information was disclosed in the company’s interim management report, which outlined several factors contributing to this downturn.
The sharp decline in profits was primarily attributed to a lower write-off of negative goodwill related to the acquisition of investments, alongside a decrease in turnover, gross profit, and other income. However, these negative impacts were somewhat mitigated by reductions in administrative expenses, expected credit losses, and lower taxation compared to the first quarter of 2025.
Gross sales for Logicom decreased by 2% to €286.6 million, down from €292.4 million a year earlier. The distribution sector experienced a marginal decline of 0.9%, which was largely due to reduced sales in key markets such as Saudi Arabia, the United Arab Emirates, Kuwait, and Romania. In contrast, the software solutions and integrated IT solutions division faced a more substantial drop, with gross sales plummeting by 18.4%, primarily due to weaker activity in Cyprus and Greece.
Overall group sales, which encompass revenue from contracts where Logicom acts as a principal as well as gross profit from agency transactions, fell by 14.6% to €199.9 million, compared to €234 million in the first quarter of 2025. Logicom clarified that under IFRS 15, certain transactions involving software licenses and cloud computing products are recognized on an agency basis, meaning only the gross profit is accounted for as sales.
Despite the drop in sales figures, the group’s gross profit margin on gross sales saw a slight increase, rising to 7.9% from 7.8% in the previous year. Additionally, the gross profit margin on reported sales improved to 11.3%, up from 9.7% in the corresponding period of 2025. However, other income saw a sharp decline, dropping to €208,726 from €925,947 in the previous year. This decrease was significantly influenced by the absence of insurance compensation of €762,462 that was collected by subsidiary Logicom Italia s.r.l. in the first quarter of 2025.
Expected credit losses decreased slightly to €71,268, down from €78,244 in the same period last year. Administrative expenses also saw a reduction of €603,329, or 3.9%, primarily due to lower personnel costs and reduced travel expenses, which were impacted by the unstable conditions in the Middle East.
Profit from operating activities, including results from controlled company Demetra Holdings Plc, fell by 3.1% to €7.9 million from €8.1 million in the first quarter of 2025. However, operating profit from the group’s ordinary activities, excluding Demetra, increased by 4%, supported by lower administrative expenses and expected credit losses, despite the overall decline in turnover, gross profit, and other income.
The cost of banking facilities, including interest receivable and payable as well as related banking expenses, decreased by 27.7% to €1.6 million, down from €2.2 million a year earlier. This reduction was attributed to a significant decrease in net borrowings used to finance turnover, as well as lower lending rates in both US dollars and euros. The group also recorded a foreign exchange gain of €95,487, compared to a gain of €1.5 million in the first quarter of 2025, largely due to fluctuations in the US dollar against the euro.
The write-off of negative goodwill in the first quarter of 2026 was associated with the acquisition of AGI-Cypre Property 45 Limited. On January 29, 2026, Logicom acquired a 31.8% stake in the company through subsidiary Najada Holdings Limited and an additional 26.3% through controlled company Demetra Holdings Plc, which holds a total of 68.2% of AGI-Cypre Property 45 Limited. The negative goodwill was a result of the disparity between the acquisition cost and the value of the company's net assets at the time of acquisition.
As of the end of the first quarter of 2026, cash and cash equivalents showed a debit balance of €418.8 million, compared to €443.2 million at the end of 2025. Short-term loans increased to €91.1 million from €78.4 million, while long-term loans decreased to €7 million from €17.2 million.
Logicom also highlighted its involvement in desalination activities through Verendrya Ventures Limited, where it holds a 60% stake. Verendrya is involved in the Episkopi and renovated Larnaca desalination plants, both of which are conducted under agreements with the water development department.
Looking ahead, Logicom stated that its first-quarter results fell within the board's estimates, indicating that there were no extraordinary or non-recurring income sources during the period, apart from the previously mentioned items in the report.