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Ingram posts solid second quarter

by Stuart Wilson, Wednesday 30 July 2008

Global distribution giant Ingram Micro has posted sales of US$8.82 billion for the second quarter of 2008 ending June 28th – up 7.7% year-on-year. Ingram Micro’s sales hit a record level for the seventh consecutive quarter and gross margins hit the highest second quarter level in 10 years.

"We’re pleased to deliver results that exceeded our guidance for the quarter, especially considering the context of the current economic climate," said Gregory M. Spierkel, CEO at Ingram Micro. "Despite increasingly competitive markets, we were able to achieve the highest second-quarter gross margin in a decade through pricing discipline, growth in higher-margin business units and improvement in our business mix. We continue to benefit from our decisions to diversify our profit streams through fee-for-service models and adjacent technologies, such as logistics and data capture/point-of-sale."

Currency changes had a 6% positive impact on revenue growth comparisons to the prior year. Second quarter profits were US$58.9 million, which includes costs of approximately US$5.5 million net of tax, related to expense-reduction programmes in North America and Europe.

EMEA sales were US$2.96 billion – 33% of total revenues - versus US$2.78 billion one year ago, an increase of 6%. The translation impact of the relatively stronger European currencies had an approximate 13% positive impact on comparisons to the prior year. Operating profits in EMEA hit US$15.7m including a US$6.8m hit for the expense reduction programme costs.

"Our regional operations performed well within persistently soft economies in many parts of the globe," said William D. Humes, executive VP and CFO at Ingram Micro. "We began to see some of the benefits of our cost-containment and mix-management actions. We made the tough decisions to reorganise where necessary and address rising transportation costs through freight-recovery programs, which will be implemented by the end of the third quarter.”

“Our focus on working capital yielded solid progress, as evidenced by the increase in inventory velocity compared to earlier this year. And, although competitive pricing within the industry was widely reported, we were able to improve gross margins while surpassing sales expectations. While growth in Asia-Pacific tempered somewhat due to the softening global economy, the region delivered the highest operating margin of the business units. Latin America was a stand-out, generating more than double the operating income of last year on 28% sales growth,” Humes added.

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October, 2019

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