Ingram Micro hails 'solid' third quarter

Ingram has posted what it describes as 'solid' third quarter financials for the period ended 3 October 2009.

Turnover dropped 11 per cent to $7.38bn in the quarter compared with $8.28bn in Q3 2008, but on a sequential basis, global sales increased 12 per cent from Q2 2009.

Net profit for the quarter stood at $42.3m, in comparison to $46.4m in Q3 2008.

Greg Spierkel, chief executive of Ingram, said: “An improving demand environment, stronger foreign currencies and our proactive efforts to engage our customers yielded solid results this quarter. Our progress stems from a number of global and country-specific initiatives aimed at strengthening reseller and vendor relationships, making it easier and more valuable to do business with us. "

He added: "I'm especially pleased with our progress toward greater profitability over the last few months. Sequential growth was the greatest in nine years, despite the third quarter's typical weakness due to seasonality. Operating income and earnings per share hit the year's highest levels, leveraging a more streamlined infrastructure.

“We held the line on costs, reducing operating expenses compared to second quarter despite the better-than-seasonal increase in sales. Gross margin declined sequentially from its six-year high in the second quarter, as expected, but it was near prior-year levels. There is more room to improve, but our initiatives over the past four quarters are clearly delivering results,” he said.

Ingram has been the talk of the channel this week after its acquisition of Computacenter’s distribution arm CCD for an undisclosed sum.

Breaking down into regions, North America accounted for 44 per cent of total sales, with turnover of $3.22bn, compared with $3.59bn a year ago. On a sequential basis North American sales increased 17 per cent.

EMEA, which accounts for 29 per cent of total sales, hit $2.15bn, compared with $2.57bn in Q3 2008, and Asia-Pacific which accounts for 22 per cent of total sales, turned over $1.64bn, compared with $1.7bn in Q3 2008. Latin America, which makes up five per cent of Ingram’s total sales, turned over $373m, versus $430m a year ago.

William Humes, chief financial officer, said: “The solid financial results this quarter were delivered through the disciplined management of key areas of the business. While increasing sequential sales, we reduced expenses and maintained working capital days below our normal range. We ended the quarter with more than $1.2bn of cash on hand, providing us with ample flexibility to continue pursuing growth opportunities as they emerge.”

For the nine months ended 3 October 2009, global sales were $20.71bn, a 19 per cent drop from the $25.68bn reported in Q3 2008, with net profit standing at $95.1m, compared with net profit of $169.4m in the same quarter last year.

Looking forward, Spierkel was both optimistic and realistic.

"”We anticipate year-over-year sales declines to be reduced to single-digit percentages, aided by improving demand and our emphasis on a better customer engagement," he said. "We expect a sequential uptick in gross margin coming largely from our seasonally strong fee-for-service business. Careful control of operating expenses will continue, but we will also consider investments that will improve our competitive position.

"While we are optimistic about what appears to be a budding recovery, we are not waiting for demand to return in order to achieve our objectives. Our near term goals are clear - improve our sales traction across all regions, nurture strategic business units, and execute with vendor and customer success as a priority."