Ingram sheds one in eight UK staff in 2009
Broadliner's UK sales fell last year, but profitability increased despite price wars and thin margins
Squeezed margins: Ingram expects "intense price competition" will ensure margins remain narrow
Ingram Micro trimmed more than an eighth of its UK workforce during a year when sales dropped marginally in a market characterised by "intense price competition".
Documents filed with Companies House this month reveal that, for the 12 months to the end of 2009, the distribution giant posted UK sales of £648.5m, down about 1.5 per cent on 2008. Despite the slight revenue decline, pre-tax profit grew 19 per cent to £4.1m.
The increased profitability can be partly explained by a drive to reduce overheads. This resulted in a 20 per cent cut to office and management staff numbers, which fell from 215 to 171 during the year. Cuts to sales and technical employees were less severe, with headcount falling from 191 to 181.
The directors' report for the year details the company's principal risks and uncertainties. Its assessment of the competitive landscape lays bare the aggressive price wars and precarious margins of the distribution arena.
"As a result of intense price competition in the IT products and service distribution industry, we expect gross margins to continue to be narrow in the future," said the report.
But, in examining the business environment, Ingram's directors reiterate the view commonly held by the big US distribution giants that the broadliners will prosper at the expense of smaller players.
"The company finds the UK IT market highly competitive with a large number of wholesale and niche distributors, large corporate resellers and retailers with leveraged purchase power," said the report.
"The company believes that the current technology industry environment generally favours large, financially sound distributors that have large product portfolios, economies of scale and strong business partner relationships."
The report also outlines four key strategies for achieving the company's goal of "profitable and sustainable growth". The first of these is to diversify Ingram's product and services portfolio to help broach new markets.
Striving to provide resellers with a one-stop shop for all their go-to-market needs, including sales, marketing and training, is also on the agenda this year. Ingram is also seeking to optimise productivity through better inventory management and the exploration of higher margin sales opportunities.
Making a big play in the mobile convergence arena is the fourth strand of the distributor's growth plans.
"As one of the few distributors with telecom carrier relationships, the company is focused on, and positioned to benefit from, the robust demand for smart handheld and converged devices, and believes that these adjacent product categories will provide a solid platform for growth," said the report.