Distribution giant Avnet has seen turnover drop 10.2 per cent to $4.27bn for the second quarter of 2009, ending 27 December 2008.
Chief executive Roy Vallee labelled the quarter “unusually challenging”, but revealed the firm would be embarking on additional cost-saving exercises and is confident of emerging stronger when the market picks up.
Profit dropped from $142.2m in Q2 2008, to $112.3m in Q2 2009. And operating income fell by 32.6 per cent to $140.1m, compared to $207.9m in the same quarter a year ago.
“Our second fiscal quarter was unusually challenging as demand weakened during the quarter, culminating with lower-than-expected revenue in the month of December," said Vallee.
“This slowdown was widespread as all three regions and both operating groups contributed to a double-digit, year-on-year organic revenue decline for the quarter.
“Based on these results and our expectation of continued market weakness over the next few quarters, we have initiated additional cost reductions of $50m in annualised savings and are expected to be fully implemented by the end of our fiscal year," he said. “We continue to actively manage costs and working capital to keep our P&L and balance sheet aligned with market realities.”
The results also revealed a drop in EMEA revenues of 3.5 per cent year on year. But during the quarter the distributor revealed it had generated $320m of cash from operations, bringing the total cash to $671m.
Ray Sadowski, chief financial officer, said: “We were able to further strengthen our liquidity position with the generation of significant cash flow during the quarter. Our balance sheet continues to be the strongest it has been in years. Regarding our profitability we continue to monitor the global economic slowdown and are taking appropriate corrective actions as needed.”
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