Another year, another $40m: Arrow Electronics to cut costs AGAIN
Shrinkage in Euro Zone and Americas cause for concern
Arrow Electronics warned that it needs to hack out $40m of costs amid concerns of significant shrinkage in economies on both sides of the Atlantic.
The enterprise distie took the covers off full-year 2012 numbers that showed a 15.4 per cent year-on-year slide in net profits to $506.3m and a 4.6 per cent dip in turnover to $20.41bn.
It fared better in the final three months of the year: sales declined one per cent to $5.4bn down from $5.44bn in Q4 2011 but net profit edged up to $174.7m from $1.74.1m.
CEO Michael Long hailed the "strong results" for Q4 - in this economic climate not losing ground is possibly seen as a bonus.
The Global Components biz decreased seven per cent in the last quarter of 2012 to $3.19bn, including a seven per cent rise in the Asia Pacific region, a six per cent decline in the Americas, and a 20 per cent drop in Europe.
"European sales were down 20 per cent year over year…reflecting a weakening in the Euro Zone economies during the quarter and a prospective change in the accounting for revenue related to certain fulfilment contracts," said Arrow.
Sales at the Enterprise Computing Solutions division grew 11 per cent to $2.22bn. It said growth in the Americas and Europe was at the mid- and high-end of normal seasonality.
The business generated $675m in cash from operations in 2012, the company confirmed.
Arrow pointed to a contraction in US GDP numbers, the first in more than three years, and shrinkage in the Euro Zone economy. "There are no meaningful signs of improvement for the near term," it said.
"With this economic uncertainty as a backdrop, the company is embarking on an incremental productivity enhancement programme that will include expense reductions of $40m on an annual basis," Arrow added.
It did not indicate what these cost-cutting activities will include, but last year it lopped off $50m. ®