Ingram may reshape despite figures

Poor UK performance could lead to cost-cutting

Ingram Micro said there could still be further reorganisation to be done at its UK operation despite reporting $8.8m profit for its second quarter 2002, compared to a loss of $12m for Q2 last year.

For the quarter ended 29 June, turnover fell by 11 per cent, from $6bn in the second quarter last year to $5.4bn this year. But the firm said that higher gross margin and reduced operating expenses had helped to increase profitability.

However, Ingram warned there could still be changes to be made at its European operations to drive efficiency.

"Europe entered the slowdown about two quarters after the US and we probably have a few more changes to make in weak-performing countries, which are the UK and Denmark," said Karen Griffiths, senior vice president and chief financial officer at Ingram Micro Europe.

Griffiths said the company recognised its value add business has becoming increasingly important in the current climate.

She added that the slowdown had forced the company to "batten down the hatches" and look at its vendor and reseller realationships to ensure which are appropriate.

Gordon Davies, commercial director at reseller Compusys, said: "the real shakeout has not yet begun. I think it will be another 12 months before we can see what the market's landscape will be."

Simon Minet, managing director at value add distributor Comstor, said broadline distributors could reduce their costs by a limited amount and some distributors are attempting to add value to increase pofitability.

"Ingram Micro bought Sphinx's Cisco unit but it has not worked that well in the UK, and this could be one area where they could cut costs," he said.