Restructuring costs drag down Avnet's Q2 profits
EMEA remains blot on Technology Solutions' copy book
The better start to fiscal '14 at Avnet Inc is continuing though EMEA remains the damp patch for the enterprise tech side of the house and component sales in the Americas were weaker than expected.
If revenue gains are the measure of success - which they frequently are in wholesaler land - then Avnet did well, with group turnover bouncing 10.8 per cent year-on-year to $7.4bn in the three months to 28 December.
The underlying business improved, with operating income up to $263.2m from $228.5m a year earlier. Restructuring charges of $28.4m, including more than $19m for severance, and corporate costs of $28.7m left consolidating operating profit of $221.6m versus $195.6m.
Income before tax came in at $188.5m, but taxes more than doubled for the period, leaving Avnet with a net profit of $125m compared to $137.5m in the same period of fiscal '13, down 9.2 per cent.
"Strong demand for IT infrastructure in our Technology Solutions (TS) Americas region and continued growth in our Asia components business drove revenues above our expectations," said CEO Rick Hamada.
The Electronics Marketing unit - electronic components wholesaling - grew 11.9 per cent to $4.15bn and operating income was up by more than a fifth to $171.7m.
The TS arm - enterprise infrastructure kit and software - saw sales jump eight per cent, (3.6 per cent organically) to $3.26bn, led by an 16.3 per cent hike in the Americas, and 1.7 per cent in Asia, to offset the 2.9 per cent slide in EMEA.
Operating profit in TS moved up 6.7 per cent on twelve months ago to $120.2m.
Hamada said this was the first time in eight quarter the global division had turned in positive organic growth, but he added, "it is not consistent across all regions."
"However, we believe our competitive position including our strong supplier and customer relationships, position us well for continued progress in improving margins and returns". ®