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Europe hurts Tech Data

Margins not gross enough

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Tech Data’s second quarter earnings could be almost 50 per cent lower than expected because of continued problems at its EMEA operation, the distribution giant confirmed yesterday.

Preliminary results released Tuesday show net sales for the quarter ending 31 July will come in between $4.8bn and $4.82bn, while net earnings will be $12.5m to $16.5m. Tech Data had expected sales of $4.7bn to $4.85bn, generating net income of $24m to $27m. The figures exclude the costs of its ongoing EMEA restructuring program.

Tech Data said its Americas region had performed well, but European operations had “impacted our overall earnings expectations for the quarter.” Gross margins were down, “principally in the EMEA region.” The overhaul of the European unit begun last quarter should boost operating performance in the region.

It added that the outlook excluded “any potential impairment charges for deferred tax assets, goodwill and other long-lived assets, which could be material, resulting from the decline in our EMEA operating performance.” ®

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