Avnet CEO: Sales down, profits down, but we dumped $70m in cost
And there's more to come. Back of the net!
Bill Amelio might be the new interim exec holding high office at Avnet but the messages he delivered as the distie reported another quarter of falling sales were all too familiar - define the strategy and cut costs.
The industry old timer, a former chief exec at Lenovo, was made top dog at Avnet on 11 July, though he can’t accept responsibility for Q4 results because that quarter closed nine days before he started.
With that in mind, he put a brave face on his predecessor’s work - Avnet’s enterprise wing, Technology Solutions, declined 7.8 per cent year-on-year to $2.28bn in the three months.
A jump in tech services, software and networking was more than offset by a drop in demand for servers and storage, the distributor confirmed.
The Americas was down 7.6 per cent to $1.38bn; EMEA fell more modestly at 0.7 per cent to $620.8m; and Asia was down 20.8 per cent to $283.9m.
Operating income fell to $70.8m from $77.6m as the growth in gross margin in both Europe and Asia was unpicked by the total sales decline. The firm didn’t specify why gross margin was up in those regions.
The Electronics Marketing (EM) division similarly reported a drop in sales, down 8.7 per cent to $3.93bn - this unit sells electronic components to electronic original equipment manufacturers.
EM posted operating profit of $155.6m, down from $205.9m a year earlier.
Group turnover was $6.22bn versus $6.79bn and operating income, after centralised costs were discounted, came in at $172.9m compared to $180.4m.
Amelio clung to the positives in the quarter including the gross profit spike, and the, er, gross profit spike. And of course there was the $70m in costs that were dumped under the Avnet Advantage scheme.
“Moving forward, we are defining a clear strategy that leverages our strengths, and we are focusing on accelerating growth, taking cost out of the business and delivering services,” he said.
Last month, Avnet confirmed it is slurping Leeds-based Raspberry Pi distributor Premier Farnell in a deal with an enterprise value of £868m.
For the year, Avnet Inc’s sales fell to $26.2bn from $27.92bn and it reported operating profit of $787.6m from $827.6m. ®