MONTREAL, January 8, 2009—TECSYS Inc. (TSX: TCS), an industry-leading supply chain management company announced today that it has signed an agreement with SystemGroup, the fastest growing international provider of customer-centric solutions to the retail, logistics and manufacturing sectors in Russia including the Commonwealth of Independent States (CIS), to enable TECSYS to penetrate the distribution market and carve out a portion of the growing warehouse management and logistics industry in the region.
Founded in 1994, SystemGroup is a 600-employee company with operations in Russia, Ukraine, Kazakhstan, Bulgaria and Moldovia. The Company's products and services enable clients to transform the "Customer Experience" throughout their supply chain while significantly improving operating efficiency. SystemGroup's clients are in the retail, logistics, hospitality, manufacturing and transportation sectors and include such major players as tiimari PLC, Finland's leading nationwide chain of stores, METRO Cash & Carry, an international market leader in self-service wholesale, Mary Kay and DHL Logistics, among many others.
"Working with a variety of customers, we have known for a long time that the market for high quality solutions for supply chain management in Russia is very far from being saturated," commented Sergey Khripliviy, CEO of SystemGroup Russia. "TECSYS offers world-class solutions which, undoubtedly, will be very popular in Russia. We are confident that the cooperation between TECSYS and SystemGroup will be the ideal mix of excellent software with an excellent implementation team expected by Russian customers."
Russia's enterprise software industry has experienced significant growth in recent years; ERP sales grew 40% compared to 2006 while overall IT services continue to grow at an annual rate of up to 25%. The combined Russia and CIS region now stands as the third largest market behind the US and Germany for the world's top three software vendors.
"The Russian distribution market is not totally new to TECSYS," stated Peter Brereton, President and CEO of TECSYS Inc. "In the mid 1990's, we made some traction in the region with a local reseller, but opted at the time to focus on North America. Today, with the strength of the Russian economy and the country's significant need for logistics systems, the time has come for our marketing to move forward. I am delighted with this partnership and the quality of people involved at SystemGroup. This agreement represents a stepping stone for TECSYS, in partnership with SystemGroup, to penetrate vertical market sectors and carve out a portion of the growth experienced in this region."
"Overall, the warehouse market is characterized by an extreme lack of space in Moscow, in particular class A. This city needs at least three times as much quality warehousing," said Dmitry Novozhilov, an analyst at PMC Warehouse World real estate firm.
Russia's government views expansion of the logistics sector as a key strategy for diversifying the economy and sustaining its growth. To this effect, it is expected that large investments will be made in the expansion of existing logistics centers and construction of new ones. A Moscow consortium is investing hundreds of millions of Euros to develop a series of logistics terminals that will help the country's infrastructure and stimulate further growth in the logistics sector.
About the Russian economy
Russia, the world's largest country, has already enjoyed eight years of robust economic growth and declining inflation. The Country's GDP grew on the average by 6.7% per year in real terms driven by expanding net exports and booming consumption. In addition, Russia's long-term credit is rated "Investment Grade" by all three rating agencies. According to a report by Troika Dialog, the largest private investment bank in the Commonwealth of Independent States (CIS), by 2008 the total number of Russian consumers will have reached 85 million, more than Germany's population, thus making it the largest consumer market in Europe. "Russia is Europe's largest consumer market in many areas," the report says. Russia is already Europe's largest market for such products as mobile phones, washing machines and certain beverages. The country is also becoming the second largest car market in Europe. Troika believes there's more growth to come as manufacturers build their distribution chains across the Russian regions. Troika is anticipating annual growth of 20-30% for the next four years.
With ten years of activity, SystemGroup has achieved great success and has become a strategic partner of the largest retail groups in Russia and the Ukraine. Information Technology continues to play a very important role in helping retailers to achieve profitable growth. SystemGroup solutions integrate cost-efficient software with predictive technologies, consulting services and the best practices of customers and partners to help retailers create, manage and serve consumer demand. SystemGroup has over 600 employees and operates in Russia, Ukraine, Kazakhstan, Bulgaria, Moldovia. For more info: http://www.systemgroup.info/en.
TECSYS is a leading supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include over 500 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, third-party logistics, and general wholesale high-volume distribution industries. TECSYS' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.