Multinational distributor Ingram Micro has reported strong third-quarter results for the period ended 30 September following the reorganisation of the company's accounting system.
For the first time since the distributor went public, gross margins increased from the same quarter the previous year. The company reported a 5.1 per cent gross margin rise, 33 points higher than the same period last year. It was also the highest gross margin since the second quarter of 1999.
Chief executive Kent Foster attributed much of the increase to Ingram's segmented accounting system (SAS), which prices Ingram products by how expensive it is to do business with a customer.
Under SAS, prices can be affected by the number of service calls or by the amount of technical support required per reseller, rather than volume of order. Before the introduction of the system, Ingram UK admitted that up to 20 per cent of its UK business had been unprofitable.
"Every customer has different costs. Some have lower costs because of large shipments or the type of products they buy," Foster said. "We understand the transaction that we have with each customer and we also understand the price we charge. If the customer is below an acceptable level, we'll work to get profitability up."
Turnover for the third quarter grew 13 per cent to $7.6bn. Profit in Europe grew 13 per cent in local currencies, but due to the increased weakness of the euro, they declined by two per cent in US dollars to $1.6bn. For the same period, profit in the US grew 17 per cent to a record $4.7bn.
For regions outside the US and Europe, profit increased 17 per cent to $1.2bn. Global ecommerce sales represented 25 per cent of total sales during the quarter, worth more than $7.5bn.
The company has also appointed Steve McAdam as UK director of specialist sales. A former general manager of components, McAdam will return to the company following a spell with remote networks developer Indus River, where he worked as European sales manager.
He will assume responsibility for the strategic sales direction of the company's components, storage and connectivity divisions in the newly-created role.
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