Avnet bemoans "sluggish" EMEA market
Distributor admits Q4 sales were hit by tepid EMEA demand, despite topping Wall Street expectations
Distributor Avnet has added to doubts over the pace of the EMEA recovery after effectively registering a drop in sales of enterprise kit in the region.
Despite posting solid Q4 numbers overall, Avnet's Technology Solutions (TS) arm logged a single-digit decline in EMEA sales, allowing for the contribution of recent acquisition Bell and currency headwinds.
TS – which distributes enterprise IT including servers, storage, networking and software – racked up global sales of $2.95bn (£1.82bn) in the three months to 2 July, up 41 per cent year on year.
But chief executive Rick Hamada (pictured) admitted the unit had encountered "continuing sluggish" growth in EMEA, offsetting stronger growth in Asia and the Americas.
TS sales in EMEA rose 64 per cent to $876.9m. However, the growth falls to 7.6 per cent with the effects of its acquisition of Bell stripped out. And allowing for currency headwinds, TS sales in EMEA fell by 4.1 per cent year on year.
Avnet's total global sales spiked 32.6 per cent year on year in Q4 to a record $6.91bn, beating Wall Street expectations in the process. The growth was still a solid 8.5 per cent with acquisitions and currency headwinds stripped out.
Adjusted operating income rose by a quarter to $270.9m, or 3.9 per cent of sales.
Avnet's components division, Electronics Marketing, posted quarterly sales of $3.96bn, up 26 per cent year on year or seven per cent excluding currency effects and acquisitions. Electronics Marketing's sales rose by 13 per cent in EMEA in local currencies.
Based partly on the strength of the Q4 results, Hamada said it was an appropriate time to authorise a $500m share buyback programme.
"As we begin fiscal 2012, we are comfortable that we have adequate liquidity to continue to grow shareholder value by investing in organic growth and value-creating M&A while opportunistically returning cash to shareholders through a buyback programme," said Hamada.