Avnet sales dampened by slippery EMEA market
Acquisition integration and "tepid market" blamed
The integration of acquisitions and a "tepid recovery" in the local tech market saw Avnet EMEA sales slide in Q4 but less challenging conditions in the rest of its world-wide operations more than made up for the dip.
The distributor pushed up global revenues 32.6 per cent to $6.9bn for the period ended 3 July, while organic growth was up 13.5 per cent. Operating profits grew 23.1 per cent to $267.2m and net profits were up 69 per cent to $239m.
Results for the year showed that sales went up 38.5 per cent to $26.5bn, profits from operations climbed more than 46 per cent to $930m and net profits jumped 63 per cent to $669m.
During the year, Avnet bought Bell Micro, Tallard and Servodata.
Mirroring the EMEA growth patterns of other firms including Ingram Micro and Insight Enterprises, Avnet Technology Solutions (TS) - its enterprise computing arm - grew 7.6 per cent but excluding for-ex gains, sales fell 4.1 per cent to $876m.
"Although sequential growth was at the high end of typical seasonality, stronger growth in Asia and the Americas was offset by continuing sluggish growth in EMEA," said recently installed CEO Rick Hamada.
"While multiple integrations and a tepid recovery in Europe presented unique challenges in fiscal 2011, the entire TS team stayed focused on profitable growth," he added.
The TS unit in Americas and Asia grew 13.4 per cent and 48.2 per cent to $1.6bn and $460m respectively. Across the group operating profits rose 18 per cent on last quarter and 9 per cent year-on-year to $68m.
He added that volume servers and storage underpinned the growth but it also reported double digit rises in software, networking and services sales.
The Electronics Marketing (EM) division - which sells components to manufacturers - was up 26.8 per cent or 11.8 per cent excluding acquisitions to $3.96bn.
"It appears the concerns over slowing economic growth and more normalised lead times are influencing customers to be cautious placing new orders," said Hamada.
Avnet, which has authorised a $500m share repurchase scheme, is forecasting fiscal Q1 sales of $3.75bn to $4.05bn for its EM unit and $2.5bn to $2.8bn for TS. ®