Arrow aims at IT, finance bods to shoot down $20m in spending
When a Q2 profit of $114.4m just isn't enough
Arrow Electronics hopes to save a further $20m in overheads as it battens down the hatches for a "period of slow growth".
The global distie heavyweight saw sales decline seven per cent to $5.15bn (£3.28bn) for Q2 ended 30 June as profits sank by more than 26 per cent to $114.4m (£72.8m).
The company's Enterprise Computing Solutions arm pushed up revenues two per cent to $1.7bn, but the Global Components business - which is trying to stay afloat in a choppy market - decreased its turnover by eleven per cent to $3.45bn.
Chief financial officer Paul Reilly told analysts on a conference call late last night that sales were in line with expectations, but added it is "prudent" to take "necessary actions ... given the mixed economic signals we are seeing".
"While we do not believe the likelihood of another severe downturn is high, we do believe we are looking at a period of slow growth as the world continues in an ongoing economic malaise," he said.
"We're currently watching any discretionary spending very carefully, and we'll be taking an additional $20m in cost and expense reduction actions."
This is on top of the $30m cost cutting target Arrow set earlier this year, meaning it will endeavour to exit 2012 having saved $50m.
He said areas where it can "get more efficient naturally" include IT, finance and logistics. "We really don't want to be aggressive and being more efficient in the sales and marketing roles, simply because that impacts customer service," the chief bean counter added.
Arrow said the Enterprise Computing Solutions business in Q2 was again "outperforming the market" - services were up 18 per cent, software climbed 13 per cent, storage up 16 per cent and networking up 57 per cent.
Server sales were slow to shift but Arrow is expecting a "rebound", though it was too early to say when this will actually happen.