Ingram Micro CEO outlines growth plan as 2011 profits falter
Weak Euro consumer biz and challenged Oz operation blamed
Ingram Micro's new chief exec has set out three strategic priorities as he gets to grips with the challenges facing the world's largest distributor and looks to bolster bottom line goodness.
Alan Monie, who returned to Ingram as COO in November and was made top dog last month, outlined the imperatives on a Q4 conference call with analysts last night.
"We need to continue to improve productivity in our very large traditional distribution business, to ensure we have the optimal environment to foster growth and deepen profitability for this high volume machine," said Monie.
He said Ingram must build "higher margin speciality businesses faster" as it seeks "deeper profitability", while the final tenant includes driving services-based initiatives such as the cloud platform.
Monie confirmed Ingram will be seeking a new COO and will continue with the acquisition strategy in embarked on several years ago.
This is not a massive strategic shift away from the path Ingram has been heading down under the leadership of Spierkel but acknowledges that distributors need to get leaner to grind out profits in the mature IT channel and look to growth sectors.
This focus on cost was apparent in Q4 with operating expenses as a percentage of revenue, 380 basis points of sales, the lowest in more than a decade. Despite this, globally net income fell 8.7 per cent to $104m including a $4.2m re-org charges.
Worldwide sales were up marginally at 0.7 per cent to $9.95bn while operating income climbed 5.2 per cent to $176.1m.
North America sales were $4.21 billion, an increase of four per cent and operating income was $90m. Turnover from the European operation fell five per cent to $3.2bn but operating income grew from $60m a year ago to $71m.
The decline in sales across Europe was primarily attributable to the difficult macro economy and competitive environment, said Ingram but operating income was lifted by rising hard drive prices and the professional market - SME and corporates.
"Our anchor countries of Germany, France and the U.K. had solid quarters based on relatively solid spending in our key assembly market and in corporate sales, which helped offset continued weakness in retail," the distributor added.
Asia Pacific sales fell one per cent to $1.96bn but excluding the challenged operations in Oz, sales grew eight per cent. In Latin America, turnover went up 15 per cent to $572m.
For the whole of 2011, sales went up five per cent to $36.3bn but profits - dented by the weak consumer market in Europe and the botched SAP implementation in Australia - fell 23 per cent to $244.2m.
Ingram is forecasting revenues to be flat or slightly down in the first calendar quarter of 2012 compared to the year ago period with the "uncertainty" in the European economy and the weakened Oz operation blamed. ®