Avnet sales slip but EMEA operation's off the hook - for now

Q2 fiscal '15 top and bottom line slippage. Damn components in Asia

Avnet Technology Solutions is on the slide again as its sales and operating profit went south in Q2 fiscal ’15. The distie’s latest president has clearly got his work cut out to turn in consistent and sustainable growth.

The enterprise tech wing of Avnet Inc today reported financials for the three months ended 27 December. Revenues declined 4.6 per cent year-on-year as reported, or two per cent in constant currency to $3.11bn.

Split by territory, sales in the Americas were up, barely, by 0.4 per cent to $1.85bn, as EMEA was down 8.5 per cent (or three per cent excluding for-ex conversions to $856.8), and Asia collapsed 13.4 per cent to $409m.

Operating profit was $117.6m, down 2.2 per cent, but operating margin climbed nine basis points to 3.8 per cent, in part due to cost cutting in EMEA.

CEO of Avnet Inc, Rick Hamada, said in a statement the top line output was at the “high end” of seasonal growth in EMEA and the Americas but this was “offset by weaker growth in our Asia region”.

He said this was “primarily” due to weaker trading in computing components in the region.

Typically, it has been the EMEA branch, under the control of regional head Graeme Watt, that has been fingered for sales slips. But on this occasion, Hamada said TS operating income margin jump was up, fuelled by growth in the “core business”, better gross profit margin and “realised expense efficiencies”.

The CEO said the management team in EMEA were “capitalising on profitable growth opportunities” and shifting resources to emerging areas - hyper converged computing, cloud and software.

This week Avnet rolled out the Elastic Cloud Infrastructure (ECI) “solution” including Cisco UCS, EMC’s ScaleIO and VMware’s vSphere virtualisation “platform”.

This month, Avnet named company stalwart and well-respected industry veteran Patrick Zammit as president of of Avnet TS. He is based in Belgium, and is close at hand to keep a watchful eye on progress or lack of it in EMEA. But judging by the latest numbers, he might need a clone in Asia.

The Electronics Marketing side of Avnet Inc - electrical components distribution - grew 6.8 per cent to $4.43bn and posted operating income of $191.4m, up 11.5 per cent. ®

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