Ingram sales hit by freight policy

Ingram Micro has admitted its freight recovery policy in EMEA has had a negative impact on sales as it released downbeat results for its fiscal third quarter.

The world’s largest IT distributor saw turnover tumble by four per cent and profit almost halve for the three months to 27 September.

Turnover hit $8.2bn (£5.36bn), compared to $8.6bn in the year ago quarter. Net profit stood at $46.4m, compared to $72.4m in the same period a year ago.

In July, Ingram became the first major distributor to announce hikes to its reseller freight charges in EMEA, in response to the spiralling fuel prices (Channelweb, 15 July).

The distributor admitted its EMEA performance had taken a hit from market reaction to the policy, as well as the soft market conditions and its policy of turning away unprofitable business.

EMEA sales fell back 10 per cent to $2.86bn, even with the impact of the strengthening euro stripped out.

EMEA operating losses stood at $4.7m – compared to a profit of $29m a year earlier. $3.1m of that was from expense-reduction programme costs, but Ingram also blamed the loss on declining sales and the associated decline in vendor rebates.

The distributor also said the market demanded more competitive pricing and expenses that are not yet aligned with the current sales environment. But it added the misalignment of expenses is temporary because “further cost-reduction activities are currently under way”.

Greg Spierkel, chief executive at Ingram, said: “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.”