Arrow profit margin returns to 2007 levels

Distributor's Q2 profits quintuple as enterprise computing and component sales both grow double digits

Taking notes: Arrow's Q2 operating margin reached the highest level since 2007

The distribution market is showing signs of returning to health after US-based outfit Arrow Electronics unveiled a five-fold boom in profits and 36 per cent revenue rise for its fiscal second quarter.

Strong sales of both components and enterprise computing products enabled the distributor to log record revenues of $4.61bn (£2.96bn) for the three months ending 3 July, compared with $3.39m a year earlier.

Arrow’s bottom line improved even more rapidly as net profit mushroomed from $21.1m to $116.2m year on year.

Chief financial officer Paul Reilly said: “The very strong results this quarter demonstrate the significant earnings capacity we have in our businesses, as operating income growth substantially outpaced sales growth on both a year-over-year and sequential basis, and our operating margin reached the highest level since the end of 2007.”

Arrow divides its business into two segments – enterprise computing solutions (ECS) and components.

Arrow ECS, which recently acquired UK security outfit Sphinx, saw revenues up 21 per cent to $1.35bn with storage, software, services and server sales all growing “strong double digits”.

Component sales fared even better, powering up 44 per cent to $3.26bn.

Arrow said it expects to post revenues of between $4.39bn and $4.79bn for its third quarter.