The contribution of BrightPoint and "disciplined behaviour on the pricing front" helped distribution monolith Ingram Micro post healthy third-quarter numbers, with sales and margins on the up.
For the three months to 28 September, the distributor grew sales by 12 per cent annually to $10.2bn (£6.3bn). Operating profit increased by 48.4 per cent to $138m, equating to a rise in margins from 1.03 to 1.36 per cent. The extra revenue came almost entirely from the July 2012 acquisition of BrightPoint.
The mobility player chipped in more than $1bn in revenue in Q3.
In a conference call with analysts, transcribed by Seeking Alpha, Ingram chief executive Alain Monié explained that the margin growth could be attributed to increased sales of value products, as well as prudent pricing policies.
"The investments that we have made in the past – that we continue making – in the higher-margin segments are starting to pay off, so that's one element of the improvement," he explained. "The second... is a better mix with, in fact, lower quantities of high-velocity retail, lower-margin type of products such as tablets. And then the third point... is our disciplined behaviour on the pricing front, which could have impacted a little bit the revenue line but at the same time, our focus is really on increasing our profitability.
Taking out BrightPoint revenue, Ingram's Q3 sales rose just 0.6 per cent to $9.09bn, with all regions coming in relatively flat on the prior year. Monié denied that focusing on profitability, rather than top-line expansion, caused him any concern that the distributor might fail to hit vendors' revenue thresholds and miss out on rebates.
"As we're trying to optimise, obviously the rebates are part of the profitability," he said. "And so inasmuch as we remain disciplined, it also means that we need to attain the targets that we have agreed to with the vendors in order for us to have a net-net improvement. So that's not part of our strategy to forfeit any opportunity of rebates as long as the business... remains healthy."
Accounts recently filed with Companies House reveal that Ingram's UK operation posted 4.3 per cent revenue growth in the 2012 calendar year, with sales coming in at £948.1m. However, profitability took a knock, as operating income declined by more than a fifth to £6m. This translates to a rollback in operating margins from 0.84 to 0.63 per cent.
The directors' report for the year said: "The directors believe the annual results represent stable progress in a highly competitive and challenging environment, creating a firm platform for growth and expansion."
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