Avnet stays positive despite Q4 loss

Chief executive Roy Vallee hints that the market may have bottomed out

Avnet is remaining optimistic despite posting a loss in its fourth quarter 2009 financials.

The distribution behemoth revealed turnover of $3.77bn for Q4 ended 27 June – a 19.5 per cent drop on the same quarter in 2008. Net loss for the fourth quarter was $30.9m compared with a profit of $144.1m in Q4 last year.

But positive-thinking chief executive Roy Vallee hinted that the market may have hit the bottom.

Vallee said: “Business conditions remained challenged in the fourth quarter but I am pleased that we were able to grow revenue sequentially in both operating groups, significantly reduce expenses, achieve near-record working capital velocity and generate $330 million in cash from operations.

“Although our bottom line results were negatively impacted by a larger than expected decline in gross profit margin due primarily to business mix and market conditions, the combination of stabilising operating income margin and substantially improved working capital velocity allowed us to improve return on working capital by 189 basis points sequentially.

“We remain committed to our return on working capital goals by group and by region and believe that our previously announced actions have the company well positioned to optimise shareholder value. Although the markets we serve appear to be stabilising, we will continue to monitor incoming order rates and manage our business appropriately."

The distributor’s Technology Solutions (TS) division sales were down 15.8 per cent to $1.64bn for the quarter, with EMEA turnover down 4.8 per cent.

Vallee added: “Technology Solutions met its revenue expectations for the second consecutive quarter, furthering our belief that the markets we serve have reached bottom.”