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Ingram reveals third quarter figures

by Stuart Wilson, Tuesday 28 October 2008

Ingram Micro has announced global sales of US$8.28 billion for the third quarter ending September 27th 2008. Revenues were down 4% year-on-year from US$8.61 billion. Profits dropped 36% year-on-year to US$46.4m. EMEA third quarter sales were down 10% to US$2.86 billion despite the relative strength of European currencies causing an approximate 7% positive impact on year-to-year comparisons.

"We continue to manage well in challenging global economies," said Gregory M. Spierkel, CEO at Ingram Micro. "Our proactive steps to walk away from unprofitable business and recover freight costs - combined with softening demand in our three largest regions - had a negative impact on worldwide sales growth. However, these actions helped us maintain a solid gross margin and prepare for a stronger, more profitable future.”

“Working capital was managed well, given the environment, with an improvement to the cash-conversion cycle compared to a year ago. Cash-on-hand was at a four-year high, exceeding debt by US$349m, which provides a steady foundation for these uncertain economic times. At the same time, we deployed US$35m in cash to repurchase shares, viewing our company as a worthwhile investment,” he added.

Ingram Micro reckons soft demand for technology products, exiting and turning away from unprofitable business and the market’s reaction to its freight cost recovery efforts all had a negative impact on EMEA sales. Operating losses in EMEA hit US$4.7m in the third quarter, which includes US$3.1m expense reduction programme costs. A year earlier, Ingram Micro had reported operating income of US$29m in EMEA. The distribution giant also blamed this year’s third quarter loss on declining sales and the ‘related reduction in volume-based rebates’.

"We believe that the softer global economy will continue well into next year, which will dampen the demand for technology products and services," said Spierkel. "We will continue to pursue optimisation actions that will create a stronger, more agile company for the future, but these efforts may have a negative impact on sales in the near term. In light of the current unpredictability of the global markets, we have decided to discontinue our issuance of specific, financial quarterly guidance."

"Looking beyond the current environment, I am optimistic about our long-term future," said Spierkel. "The tough choices we’re making today will result in greater profitability and improved shareholder returns. This is a strong, profitable company led by a seasoned management team with a proven track record of overcoming difficult markets. I’m confident that we will emerge from this global downturn stronger than ever."

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November, 2019

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