European realignment hits Tech Data profits

Distributor absorbs European severance costs of $11m in its fourth quarter

Tech Data has recorded a fall in Q4 profits as its European restructuring drive and decision to exit Brazil and Colombia hit its bottom line.

For the three months ending 31 January, the parent company of Computer 2000 posted flat sales of $7.1bn (£4.5bn) as operating profit fell from $117.8m to $83.8m year on year.

Although European sales inched up one per cent to $4.37bn, Tech Data has been busy realigning its local cost structure to "more closely match market conditions" and absorbed severance costs of $11m during the quarter.

Consequently, operating income from the region fell from $71.6m to $59.8m year on year.

ChannelWeb understands that the restructuring, which is now thought to be virtually complete, related not only to cutting headcount but also to realigning resource to newer and emerging technologies, such as smartphones.

Results for the quarter also included a sizable $28.3m charge for the loss on the disposal of its Brazilian and Colombian subsidiaries.

Net sales in the Americas region fell by one per cent to $2.74bn.

Tech Data chief executive Robert Dutkowsky said: "We are pleased with the solid performance delivered by both regions, despite a slowing overall IT market and challenging macro-economic environments in certain European countries."

For the fiscal year, Tech Data's sales rose nine per cent to $26.5bn, with operating profit roughly flat at $3.28bn.

The distributor said it expects its fiscal first quarter sales to be flat in both regions.