EMEA profit freeze for Ingram

Weak consumer market contributes to Q2 margin decline for distributor

Despite a solid sales increase, Ingram Micro had to endure a decline in profitability during Q2 2011 as the European consumer market proved an unyielding place to operate.

For the three months to 2 July, the broadline giant grew sales seven per cent year on year to $8.75bn (£5.4bn). Operating income stood at $97.1m, a 7.2 drop on last year's figure. This equates to a fall in operating margins from 1.28 to just 1.11 per cent.

The fall in profitability was attributed, in part, to problems caused by the rollout of a new enterprise resource planning system in Australia. Ingram also bemoaned softness in the European consumer market, and EMEA was by far its least profitable region.

Sales in the region rose 11 per cent year on year to $2.64bn. However, operating profit slumped by almost a quarter to $16.9m, which left operational margins at a skinny 0.64 per cent, three-tenths of a point less than in Q2 2010. Second-quarter operating margins in North America, Latin America and Asia-Pacific stood at 1.8, 1.68 and 0.84 per cent, respectively.

Ingram chief executive Greg Spierkel said: "Demand for commercial technology products has moderated but remains solid throughout the world. Stability in the small and medium business markets is offset by soft consumer demand in Europe and parts of Asia-Pacific, which we first began to notice late last year.

"In this environment, we continue to focus on business enhancements – from infrastructure improvements to growth initiatives – that will drive better service for our business partners."