European declines drag down Ingram Q1 figures

Distributor's otherwise solid numbers marred by sales and margin drop across continent

Europe has again proved the thorn in the side of one of the distribution giants, with the region putting a strain on Ingram Micro's first-quarter growth and profitability.

The broadliner's global sales for the three months to the end of March fell one per cent annually to $8.6bn (£5.3bn). However, operating profit was up about four per cent to $104m, equating to margins of 1.2 per cent.

Europe was the only drag on the distributor's numbers, being the sole region to post a sales decline, and the only one to see margins erode.

Quarterly revenue across the continent fell eight per cent year on year to $2.6bn, while operating profit slumped nearly a third to $22m. This equates to a fall in operating margins from 1.12 to 0.83 per cent. With operating margins of close to two per cent, the north America region ran almost twice as profitably as its transatlantic counterpart during Q1.

Moreover, Ingram posted a European pre-tax loss of $4.8m, which the firm chalked up to the impact of currency fluctuations between the dollar and the euro.

But the distributor took pains to point out that that its sub-par European performance "was tempered by relative strength in Germany and the UK". Both countries reportedly posted "modest sales growth" during Q1.

Ingram's mixed Q1 figures come in the same week that Avnet's Q3 results showed hefty declines in EMEA sales.

Ingram's global outlook for Q2 appears muted, with turnover forecast to be flat sequentially. Gross margins are predicted to fall in Q2 as the company will no longer be able to drive profits off the back of its high HDD inventory levels.

Alain Monie, chief executive of the distributor, said: "We continued the positive momentum with which we exited 2011, delivering solid first-quarter results highlighted by improved profitability and strong sales in our higher-margin businesses.

"We opened the year well and we are beginning to reap the rewards from our efforts on many fronts. We still have areas for improvement and I look forward to building on our momentum and driving continued execution towards our strategic and financial goals."