Ingram warns price increases are on the cards
Blames vendor squeeze
Ingram chairman and CEO Jerre Stead yesterday warned that vendor squeezes would force through trade price increases. "In 1999, Ingram Micro and other distributors have experienced changes in vendor terms and conditions and incentive programs that have resulted in increasing the cost of goods we sell to our customers," he said. "As we enter 2000, we are implementing business changes to improve margins for our services by increasing our prices to include these higher costs as we also continue to tighten our business processes with our suppliers and our customers." Ingram Micro beat analysts expectations yesterday by recording $75 million pre-tax profit for the fourth quarter of 1999. The US distributor saw profits beat the previous year's final quarter by $2 million, in what was traditionally a poor quarter for many in the sector due to the Y2K slowdown in corporate spending. Sales rose 26 per cent to $7.8 billion -- including a 19 per cent hike in European revenue to $2.36 billion and 18 per cent growth in the US to $4.35 billion. Figures included a net gain of $125 million from the sale of 35 per cent of its Softbank shares. For the full year, Ingram saw pre-tax profit drop to $183 million after reorganisation costs of $13 million and a one-off gain of $4 million. This compared to $245 million for the previous year. Sales topped $28.1 billion, up 27 per cent on 1998. Based on current estimates for the first quarter of 2000, the company said it was expecting to turn in pre-tax profit from $88 million to $94 million, including $69 million from the sale of an extra 15 per cent of its original stake in Softbank. Shares closed at $15.50, below its initial offering price of $18 in 1996. ®
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