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HOME REGIONS EMEA › Ingram Micro lowers third quarter forecast

Ingram Micro lowers third quarter forecast

by Stuart Wilson, Thursday 18 September 2008

Global distribution giant Ingram Micro has lowered its third quarter sales forecast. Ingram now expects its sales for the quarter to come in at between US$8.3 billion and US$8.6 billion with profits in the US$30m to US$39m range. This includes a US$5m cost related to the completion of an expense reduction programme in Europe and North America.

Ingram Micro had previously predicted sales of between US$8.5 billion and US$8.8 billion for the quarter ending September 27th 2008. "Earlier this month, we disclosed that softer economies created more competitive environments in July and August," said Greg Spierkel, CEO at Ingram Micro.

"It’s now clear that this economic softness is continuing into September, which is exerting greater pressure on operating margins. In Europe, we are not seeing the typical September bounce-back from the summer holidays. North America seemed to be relatively stable in the summer months, but we’re experiencing broad-based softness in September," Spierkel added.

"We are exiting low-return businesses and categories, particularly in our largest operations, which dampens results during this challenging economic period but will create a more profitable operation in the future," Spierkel explained. "We are also reducing costs as quickly as possible, with our current restructuring programme expected to generate US$18 million to US$24 million of annualised savings beginning early next year, but the pace of the downturn is more rapid than expected.”

“We are reviewing additional cost-reduction actions to supplement this current program in the coming quarters. We also introduced a freight-recovery initiative to offset rising fuel costs, which is still in a transition phase but we’re confident it will strengthen the organisation for the long-term," stated Spierkel.

Spierkel added that all regions have initiatives in place to improve results. Ingram Micro is scheduled to report results for the third quarter on October 23rd, 2008.

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