Ingram Micro - the world's largest technology distributor - doesn't expect the global economy or the IT industry to pick up anytime soon.
Last night the firm posted calendar Q3 numbers with a driving currency headwind almost wiping out sales growth not helped by the economy in Europe either.
Turnover climbed 1 per cent year-on-year to $9.03bn in the three months, dampened to the tune of 5 percentage points by the translation of foreign currencies.
Operating income was $92.6m up from $85.4m, and net profit was $53.3m compared to $23.3m a year earlier, when aggressive pricing in the deflated Euro zone and a botched enterprise resource planning rollout in Oz took a toll.
In a conference call with analysts, Ingram CEO Alan Monié said: "It is clear that macroeconomic environment and mid-term perspective are difficult ... but every region grew sales in local currencies".
Turnover in North America was up 5 per cent to $4bn, with "robust" shipments to SME resellers fuelling a sales uplift across all US operating divisions. Operating income was up 4 per cent to $66.9m.
The picture in Europe was different - sales in constant currency fell 9 per cent to $2.4bn, climbing a single per cent in local currency, as operating profit dipped 7.4 per cent to $14.9m.
"Although the region continues to suffer from difficult economic conditions, we had overall growth in local currencies, led by anchor countries of Germany, France and the UK," said Monié.
"Gross margins continue to be under pressure [in the region]," he added. Competition in the volume or broadline IT markets continues to be fierce, Ingram said.
Asia Pacific was up 6 per cent in dollars and 10 per cent in local currency to $2.2bn, Latin America was up 11 per cent to $467m.
Monié said Ingram it lost $2.8m due foreign currency translation impact on "Euro-based inventory purchased in our European purchasing facility" - a year ago it made a $1.3m pre-tax gain.
In terms of vendors, HP accounted for 21 per cent of revenues, Cisco was 10 per cent as was Apple for the first time in Ingram's history.
Op-ex was $361m, including charges of $7.6m – consisting of $5.3m related to restructuring in Australia, New Zealand and Europe and $2.3m costs for the BrightPoint acquisition.
The acquisition of BrightPoint closed more than a week ago and said Monié said that it has undertaken integration planning in line with industry regulations.
"We expect to recognise some early cost synergies in areas such as debt financing and elimination of public company costs... [and] assigned teams to help rapidly identify near-term, cross-selling opportunities," he said.
The outlook for the remainder of the year and into next remains murky and is perhaps getting murkier, said Ingram's chief.
"The level of visibility into the world's economies and IT markets is decreasing. Under these conditions, the traditional Ingram Micro business are not counting on revenues significantly different this coming quarter versus what they were last year," said Monié.
"While remaining under pressure, gross margin is expected to increase sequentially over Q3 in line with the historic seasonality, although we will not have the gross margin uplift from higher hard disk drive pricing that benefited Q4 last year," he added. ®