Euro recession over as sales rebound for mega distie Ingram Micro
But huge IT biz suckerpunched in the profits by restructuring
Economic recovery on both sides of the Atlantic – and to a lesser extent sales of Apple's iPhone in certain countries across Europe – helped Ingram Micro offset declines in its mobility and Asia Pacific wings… but only just.
First calendar quarter revenues at the world's bulkiest tech distie went up one per cent year-on-year to $10.38bn, as North America and Europe grew 1.5 per cent and 12 per cent respectively to $3.92bn and $3bn.
The Advanced Solutions arm led growth across the pond and Ingram said it was getting decent traction from its cloudy aggregation platform.
The businesses in the UK, France, Netherlands, Spain and Italy reported double-digit sales growth with SMB and relatively robust retail sales boosting the top line.
Paul Read, president and chief operational chap at Ingram, described the biz in Europe as strong "albeit" compared to a "pretty weak" Q1 2013.
"But the SMB strength is encouraging and on the retail side, it's up. It [was] helped of course by the Apple business that we have, which is proceeding very well. In general there is a lot of stabilisation in the region.
"So I think we are in the [middle of a] big turnaround in the Europe business," Read added.
Both Ingram and arch rival Tech Data signed distribution deals with Apple to carry the Jesus mobe last year but this only applies to selective countries, not including Blighty, meaning UK resellers cannot buy SIM-free iPhones.
The distributor's CEO Alain Monié pointed to a pick up in the PC refresh cycle as a mini contributing factor to sales in Europe and North America, "but we selected not to participate in some of the business as it was not up to our profitability standards".
The comparatively smaller sales engine in Latin America also posted turnover growth, up nearly seven per cent to $493.5m, but it was Asia Pacific and mobility division Brightpoint that let the group down.
Turnover in Asia Pac fell 2.4 per cent year-on-year to $2.14bn and Brightpoint, acquired for $850m in 2012, hauled in $830m worth of business compared to $1.07bn last year, down 22 per cent.
The firm said the reasons for the declines were twofold: $100m worth of mobility sales were transferred from Brightpoint to the classic volume distribution side of the house and a handheld device OEM stopped building the products, which particularly impacted Indonesia.
A higher-margin sales mix helped Ingram up gross margins to 5.88 per cent, rising from 5.7 per cent a year ago. It delivered gross profit of $610m versus $585.3m.
Selling, General & Admin expenses coupled with a goodwill write-down contributed to a rise in operating expenses but it was the $38.4m restructuring costs that winded Ingram, although this was not unexpected.
The firm is in the middle of a multi-point plan to revamp operations, which includes consolidating real estate, cutting the workforce and establishing a Shared Service centre in Bulgaria. The changes are expected to yield yearly costs savings of up to $100m.
Operating profit slumped to $68.3m from $90.8m in Q1 2013 and net profit came in at $24.8m against $49.76m, a drop of 50 per cent. ®