Ingram hails 'record' second quarter

Ingram Micro has posted ‘record’ second quarter results for the period ended 28 June 2008.

Turnover increased by eight per cent to $8.82bn, compared to $8.19bn in the same period a year ago. Net profit for Q2 stood at $58.9m, compared to $52.3m last year.

European sales increased to $2.96bn compared to $2.78bn in Q2 2007, accounting for 33 per cent of total revenues, an increase of six per cent.

For the six-month period, turnover hit $17.39bn, a six per cent increase over the $16.43bn in 2007. Europe again increased its turnover by three per cent to $6.02bn. Net profit for the half-year shot up to £123m, compared to $89.4m in the same period a year ago.

Greg Spierkel, chief executive of Ingram said: “We are pleased to deliver results that exceeded our guidance for the quarter, especially considering the context of the current economic climate. Despite increasingly competitive markets, we were able to achieve the highest second-quarter gross margin in a decade through pricing discipline, growth in higher-margin business units and improvement in our business mix. We continue to benefit from our decisions to diversify our profit streams through fee-for-service models and adjacent technologies, such as logistics and data capture/point-of-sale."

William Humes, chief financial officer at Ingram, said: “Our regional operations performed well within persistently soft economies in many parts of the globe. We began to see some of the benefits of our cost-containment and mix-management actions. We made the tough decisions to reorganise where necessary and address rising transportation costs through freight-recovery programs, which will be implemented by the end of the third quarter. Our focus on working capital yielded solid progress, as evidenced by the increase in inventory velocity compared to earlier this year. And, although competitive pricing within the industry was widely reported, we were able to improve gross margins while surpassing sales expectations."

Looking ahead, the broadliner paints a cautious, but confident picture, predicting Q3 profit of between $52m and $61m, with turnover ranging between $8.5bn to $8.8bn.
Spierkel added: "We expect the macro-economic softness to continue into the third quarter. Solid growth is expected from Latin America, but sales growth in the other regions will be more modest. The benefits of our cost-containment and freight-recovery efforts are expected to be more visible in the third quarter, improving operating leverage. We also expect continued progress in our fee-for-service and adjacency operations. The actions we're taking today will buffer us from the weaker market and better position us when the economic environment improves. Overall, we continue to be confident about the business, our industry and the strength of our management team."