Specialisation bears fruit for Tech Data

Distributor claims decision to turn back on less profitable business boosted bottom line in its second quarter

Robert Dutkowsky: Our second-quarter results clearly demonstrate our strategic focus on improving profitability

Tech Data has held up a rise in second-quarter profits as evidence that its drive to focus on more specialist products is paying off.

The global distributor’s revenue growth was hurt badly by the weakening euro in a quarter in which it made three acquisitions. In dollar terms, total sales for the three months to 31 July rose 5.6 per cent year on year to $5.18bn but its quarterly growth rises to over 11 per cent allowing for currency effects.

Chief executive Robert Dutkowsky said the market’s recovery had allowed the distributor to focus more on growing with select customers and vendors, while turning its back on less profitable business.

Consequently, operating profit grew by 22.1 per cent to $65.8m and operating margin hiked from 1.04 to 1.20 per cent year on year.

“Our second-quarter results clearly demonstrate our strategic focus on improving profitability and return on capital employed through responsible growth, and by diversifying into more specialised offerings,” Dutkowsky said.

European sales rose 3.2 per cent to $2.87bn but were up 15 per cent on a euro basis. Operating profit from the region stood at $23.8m, or 0.83 of sales – up from 0.76 per cent of sales a year earlier.

Dutkowsky said: “While we anticipate the impact of foreign currencies to have a more pronounced effect on the fiscal year's second-half results than the first half, we are confident that our continued focus on responsible growth and excellent expense and asset management, will deliver solid results for the remainder of the fiscal year, and keep us on the trajectory to achieve our longer-term financial objectives.”