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By | Paul Kunert 25th July 2014 13:58

The XP factor gives MEGA-DISTIE Ingram Q2 sales a boost

Just don't ask about operating profits...

The tills rang often for massive global distie Ingram Micro during its second calendar quarter, helped by frenzied PC refresh activity, but squeezing out better long term profits remains a work in progress.

The globe's largest distie reported a revenue hike of $600m year-on-year to $10.9bn. Despite a near six per cent leap in the cost of sales, gross profit climbed by the same percentage to $633.7m.

But a low-teen double digit bounce in operating expenditure dented operating profits, which fell 13.7 per cent to $98.2m.

Rising overheads included a spike in selling, general and admin expenses, amortisation of intangibles and big re-org costs related to a company-wide restructure that includes redundancies.

Once interest repayments and taxes were accounted for, the company made a net profit of $50.6m, down from nearly $70m a year ago.

At its investor day in June, the US-headquartered biz outlined a roadmap to improve operating margin over the next two years, assisted by cost cutting and increased sales in mobility, supply chain logistics, data centre transformation, computing and cloud.

CEO Alain Monie last night reminded financial analysts of this on a conference call, adding the "demand environment continues to improve globally and it was "taking share selectively".

The tech and "other solutions" divisions were up five per cent to $9.2bn in sales and mobility grew 13 per cent to $1.7bn.

PC shipments picked up momentum, rising between seven to eight per cent, "mostly on the desktop side", the company said, with a double digit rise in Europe but good growth in North America too.

After almost two years of straight declines, the PC market was awoken from its slumber by the end of support for XP and improving economic indicators that has given businesses confidence to invest.

Ingram said XP replacements may have peaked but should continue until early calendar Q4.

North America total sales were up eight per cent to $4.6bn, up 13 per cent in constant currency in Europe to $3.4bn, down seven per cent in Asia Pacific to $2.4bn and up in the smaller Latin American unit.

Revenues are forecast to grow high single digits in Q3.

The company expects to wring out $80m to $100m of annualised savings in 2016 through the major reorganisation. ®

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