The Channel logo

News

By | Paul Kunert 26th April 2013 08:31

Even world's most MASSIVE distie takes punch to wallet

Profits down by over 40% but sales boosted by acquisitions

Restructuring costs, higher taxes and aggressive pricing on both sides of the pond throttled Ingram Micro's profits for calendar Q1 but acquisitions allowed the world's largest tech distie to post double-digit sales gains.

Turnover climbed 19 per cent to $10.26bn including a $1.1bn contribution from Brightpoint and $75m from Aptec, leaving organic growth at a more modest 5.1 per cent - still pretty damn decent in the current climate.

Gross profit came in at $585.3m, up from $467.5m a year earlier, but the cost of those two buys caused selling, general and administrative expenses to rise 31 per cent to $474m; write-downs cost $11.9m versus $2.9m 12 months ago; and re-org costs jumped to $8.6m from $557,000.

This left an operating profit of $90.8m compared to $104m a year earlier, but a 33 per cent rise in interest payments to $15.6m and some $26.3m coughed to the taxman left Ingram with net profits of $49.7m, a drop of 44.5 per cent.

Sales in North America went up seven per cent to $3.8bn but operating income slid 20 per cent to $55.5m. Turnover in Europe was flat at $2.6bn - as expected - and operating profit dropped to 36 per cent to $13.9m.

The division in Latin American reported record revenues of $462m up from $431.6m in Q1 2012 with operating profits of $5.5m, down 25 per cent. Asia Pacific hit revenues of $2.19bn, up 12 per cent and profit from operations was $13.8M, a fall of 2.8 per cent.

The massive shift to tablets and other mobile devices continued to hit gross margins, said president and CEO Alain Monie, but it also created associated supply chain services to OEMs and service providers - this was part of the reason for paying $850m for Brightpoint, he added.

Vendors used price to stimulate demand in the quarter which Ingram's COO Bill Humes described as "increased competitive pricing...due to the sluggish economic environment in Europe and some competitors trying to regain lost market share in North America".

Things aren't going to change in the short term, he added, and as such Ingram is investing in new higher margin areas, as with recent acquisitions, and this will continue to "impact near-term expense levels" but boost the bottom line in the long run, said Humes. ®

alert Send corrections

Opinion

Chris Mellor

Drives nails forged with Red Hat iron into VCE's coffin
Sleep Cycle iOS app screenshot

Trevor Pott

Forget big-spending globo biz: it's about the consumer... and he's desperate for a nap
Steve Bennet, ex-Symantec CEO

Chris Mellor

Enormo security firm needs to get serious about acquisitions

Features

Windows 8.1 Update  Storeapps Taskbar
Chinese Buffet self-service
Chopping down the phone tree to scrump low-hanging fruit
An original member of the System/360 family announced in 1964, the Model 50 was the most powerful unit in the medium price range.
Big Blue's big $5bn bet adjusted, modified, reduced, back for more
Microsoft CEO Satya Nadella
Redmond needs to discover the mathematics of trust