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05 Sep 2005
Tech Data has admitted that it still has a lot of work to do in Europe, despite having already restructured in the region earlier this year.
The distribution giant is the parent company of Computer 2000 (C2000) and Azlan in the UK. Speaking to CRN, Steve Raymund, chief executive of Tech Data, said: “Things are on track with our recovery plan in the UK. Europe is a bit softer than the US, with quite a bit of turmoil among corporate resellers particularly in the UK.
“We have quite a bit of work to do in Europe, but we feel we are on the right track. Certainly there is nothing wrong with our model.
“We did experience some slowdown, but our root problem is related to some weakness in organisational structure coupled with one too many transformational projects.
“However, as a result of the steps we have already taken, we feel confident that upcoming quarters will see substantially improved performance.”
The firm recently reported a $59.4m loss for the period ended 31 July, although Q2 turnover increased by 5.5 per cent to $4.83bn. The loss was attributed to $19.3m in restructuring charges.
The cost of the restructure is expected to total $40m to $50m, but the distributor claimed it will eventually result in annual savings of roughly the same amount.
Earlier this month the distributor was forced to almost halve its expected earnings for the quarter after noting “challenges in Europe”. It also cut a number of jobs from C2000 as part of its EMEA restructuring process (CRN, 1 August).
Alan Norton, head of intelligence at credit reference agency Graydon, said the firm was now in a strong position. “The main reason the firm lost money was due to restructuring. But now these changes are being implemented we expect it to return to profitability in Q3.
“Tech Data has a strong management team in place and it is the people that run the company that matter.”
sara_yirrell@vnu.co.uk
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