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By | Paul Kunert 15th February 2013 14:05

Insight Enterprises operating profits tumble down back of sofa

Costs, sales blamed as execs grope beneath cushions

Tech reselling monster Insight Enterprises saw operating profits dive on this side of the Atlantic due to a spike in operational costs and enterprise customers delaying or shelving purchases.

Sales at the EMEA operation grew two per cent year-on-year to $378.4m but earnings from operations dropped by 53 per cent to $3.98m.

Stuart Fenton, EMEA president, said there were "mixed results" across the various countries in the region with strength for example in the Netherlands and Germany through the Inmac acquisition.

"That business continued to grow nicely, we've turned around the performance of that acquisition in a marked fashion," he told The Channel.

In the region, Q4 revenues derived from software sales declined seven per cent as hardware and services increased by 24 per cent and 37 per cent respectively.

"There are some challenges in the year over year comparison as it relates to large enterprise opportunities across the piece including the UK, which affected the results," he said.

Selling and administrative expenses in EMEA climbed 13 per cent or $5.3m and Insight also took a hit of $1.3m in severance and restructuring charges.

The higher costs related "principally" to a major ERP roll out in six countries including the UK with another eight to go live during the first half of this year.

At a group level, Q4 sales fell one per cent to $1.3bn, operating profit fell 13 per cent to $36.6m and net profit dropped 40 per cent to $20.8m.

Turnover in North America dipped two per cent to $922.5m and operating profit dropped ten per cent to $30.3m. In APAC, sales were down 12 per cent to $59.9m but operating profit rose 52 per cent to $5.1m.

For the full year, group sales were flat at $5.3bn, operating profit climbed one per cent to $148.2m and net profit was down seven per cent to $92.8m.

CEO Ken Lanmeck said on a call with analysts last night that sales growth in the public sector and mid-market were "offset by lower spending by larger enterprise clients".

"Market positions were softer as macroeconomic concerns globally led to lower capital spending for our IT products," he said. ®

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