Ingram cost-cutting efforts 'paying off'
Distributor beginning to see results from $107m restructuring programme
Broadline distributor Ingram Micro has claimed its restructuring programme, which cost $107m over the past year, is beginning to pay off.
Greg Spierkel, president of Ingram Micro Europe, said the streamlining, known as the Profit Enhancement Programme, is likely to run for another two quarters.
This follows the firm's recent results, which showed a $10.3m loss for the fourth quarter 2002.
"What we feel good about is the fact that, even with a four per cent year-on-year drop in sales, our profitability went up," Spierkel said.
Ingram set aside $140m to help it streamline operations, aiming to cut costs and increase margins.
Without the restructuring charges during the quarter, profit would have been $29.2m on turnover which went up by 5.2 per cent over the previous quarter to $5.9bn.
Spierkel said Europe had avoided much of the streamlining. "Most of the cuts have been made in North America, although we have closed down operations in Poland, Portugal and Holland," he said.
The company also outsourced its IT infrastructure to ACS in December as part of its attempt to cut global costs.
Ingram said it is also reaching out to smaller resellers and improving credit lines. The company said it has increased the number of resellers it works with in the UK by 20 per cent.
Des Lekerman, managing director of reseller Eurodata Systems, said distributors play an essential role as finance houses.
"We are getting as much as 60 days' credit from some distributors, which is essential because customers are taking 45 days to pay," he said.
"This is particularly important with hardware because you do not make much money on it."