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By | Paul Kunert 29th February 2012 10:13

Brazilian shave costs Tech Data as profits cut by third

Latin America exit, lay offs dent flat Q4 sales

Tech Data (TD) exited fiscal 2012 on a low with profits from operations significantly dented by one-off expenses incurred by the closure of its Columbian and Brazilian outposts and restructuring costs in Europe.

Sales for Q4 ended 31 January were flat year-on-year at $7.1bn but operating profits fell 28 per cent to $83.8m as TD swallowed $28.3m in charges to close the Latin American arms and coughed up $11m for severance payments in Europe. Net profit slid 30 per cent to $54.1m.

CEO Bob Dutkowsky told analysts on a conference call: "We exited unprofitable markets and realigned resources in Europe to improve productivity and match our cost structure with market conditions."

Brazil's "complex legal, tax and regulatory environment" made business there economically unviable and it had not seen traction in Columbia to justify continued investment, the firm said.

The changes in Europe were not specified but TD said last quarter it had planned a net reduction in regional headcount - and as reported by El Reg, bosses canned the Avaya team and laid off a few senior heads in Azlan.

Sales in Europe grew two per cent to $4.37bn and operating income dropped 16 per cent to $59.8m. Dutkowsky said the commercial and SME sectors held up but consumer spending remained weak. Turnover in the Americas fell one per cent to $2.74bn and profit from operations slumped 45 per cent to $26.7m. The small business space "continued to show strength" but public sector faced pressure.

Dutkowsky said it saw little benefit from the hard drive crisis - unlike rival Ingram - as the firm had shifted away from components sales over the last five years

Results for the year showed a nine per cent increase in sales to $26.5bn, operating profits fell 1.7 per cent to $328m including the cost of the withdrawal from parts of Latin America, and retained profits dropped 3.6 per cent to $206.3m.

Looking ahead TD said it expects flat sales in the first quarter of fiscal 2013 across both of its regions. ®

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