Forget the accountancy scandal, our biz is back: Tech Data

Gross profits up, surge in PC demand

Gross profit grew to $335m, resulting in a gross margin of 4.95 per cent versus 5.12 per cent in corresponding period last year. The drop in margin was due to lower data centre sales, higher lower margin gear (such as PCs and mobility), and proportionately less business with VARs.

Despite the rise in sales, operating expenses edged up by just 0.4 per cent to $271.2m as the distributor kept overheads on a tight leash. Restatement and remediation-related costs came in at $2.06m compared with $14.9m a year earlier. TD also saw a $5m gain from the settlement of an LCD price fixing court case.

The discovery of accounting irregularities saw the company’s management team reassess its focus

All this left operating profit at $66.7m, up nearly 4.4 per cent on a year ago. After interest expenses and taxes were paid, net profit was $41.7m, up from $37.7m, a rise of 10.6 per cent.

Chief beanie Jeffrey Howells forecast low single digit year-over-year sales in both regions in local currency for Q4, seasonally the biggest period for TD.

He pointed out the “surge in PC demand, robust tablet sales and new mobile product introductions in Europe” in its final quarter of last year led to higher sales than is typical.

“It is important to note that the PC refresh has now been in place for at least four quarters, tablet sales have moderated, and we’re coming off a stronger Q3 this fiscal year than last, and therefore we are not forecasting a repeat of the exceptional sequential growth,” said Howells.

For the next financial year, the CFO said TD will continue to “reallocate our costs to the growth areas ... [and] to exit the less profitable areas that don’t have the appropriate return on invested capital," said Howells.

“There’s more revenue available out there that we are choosing not to participate in because we’re trying to keep the costs in line, and what that really means is we’re trying to utilises the dollars and euros we’re spending more efficiently to improve the operating results in both regions," he added. ®