Ingram Micro reports flat second quarter
by Stuart Wilson, Friday 27 July 2012
Distribution giant Ingram Micro has reported global sales of US$8.78 billion in the second quarter of 2012 compared to US$8.75 billion a year earlier. The distributor’s gross profits fell 1.4% year-on-year to hit US$452.7m – a gross margin of 5.16% compared to 5.25% a year earlier. Ingram Micro attributed the decline to a ‘greater mix of sales in high-volume, lower margin products and in lower margin customer segments, as well as a competitive selling environment’.
After tax profits were up 2.6% year-on-year at US$61.3m in the second quarter of 2012. Working capital days were 25, within the company’s targeted range of 22 to 26 days.
Ingram Micro’s sales in Latin America hit an all-time high for a second quarter growing 14% year-on-year, despite a 13 percentage point negative impact to sales growth from the translation impact of weaker local currencies. Latin America sales hit US$442.4m in the second quarter of 2012 with an operating margin of 1% compared to 1.68% a year earlier.
In Europe, while sales were down 7% in US dollars, demand was solid in local currencies led by double-digit growth in Germany and the UK. The translation impact of weaker local currencies negatively affected growth by 10 percentage points. European sales hit US$2.46 billion in the second quarter of 2012.
"We had another solid quarter, with strong sales in many countries, particularly relative to overall IT spending," said Alain Monie, president and CEO at Ingram Micro. "We are executing on our strategic initiatives. We continue to invest organically in the business across all regions to fuel future accelerated growth in higher margin markets and the business is absorbing these investments while still generating solid operating margins.”
“We are also delivering on our M&A strategy to accelerate our presence in high-growth and higher value markets, as we recently announced the signing of a definitive agreement to acquire BrightPoint, a global leader in providing device lifecycle services to the mobility industry. We are moving the business in the right direction and we remain highly focused on driving further improvements across the company," Monie added.
Bill Humes, COO and CFO, commented: "As illustrated by strong operating expense leverage, we are doing a good job aligning costs with the level and mix of sales in each region. Our relatively robust local currency growth rates are being fuelled in-part by high-volume sales of lower gross margin products."
"The cost to serve these markets is low and the working capital dynamics and contribution margin are acceptable, leading to solid returns on investment. I am pleased with our performance in what continues to be a challenging selling environment throughout much of the world and look forward to our continued execution on our stated financial and strategic initiatives," he added.