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By | Paul Kunert 21st November 2011 14:44

Tech Data battens down hatches for miserable Xmas

Dark talk despite profit rise in Q3

Tech Data is cutting costs to reflect the leaner economic climate and in anticipation of modest single digit sales growth over the Christmas quarter.

The distie giant today reported a seven per cent sales climb to $6.6bn (£4.2bn) for the third quarter ended 31 October, helped by a currency tailwind and a 10.6 per cent profit rise to $89.6m (£57.2m).

"Tech Data posted record third-quarter results despite some very challenging market conditions," said Tech Data CEO Bob Dutkowsky.

Sales were up three per cent in North and Latin America to $2.78bn and ten per cent in EMEA (six per cent on a euro basis) to $3.81bn.

The distie juggernaut has fared relatively well in the weak-demand environment, with sales for the nine months of fiscal 2012 up 12 per cent to $19.4bn and operating profits up nearly 13 per cent to $244m.

But with talk that Europe is perched on the edge of a second economic recession, Tech Data is forecasting conservatively.

"We are planning, in both regions, for flat to low single-digit sales growth in local currencies," said Dutkowsky.

"In Europe, we are currently realigning our resources to more closely match our cost structure and our skills portfolio with market opportunities," he said.

This will result in incremental costs of around £15m in fiscal Q4, the distributor said. ®

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