Q1 EMEA hardware sales boost for Insight but profits erode

North America increases software revenue and profitability as EMEA does the opposite during reseller's first quarter

A hefty spike in EMEA hardware sales kept reseller giant Insight on the sales growth path during 2012's opening quarter.

However, it was North America that allowed the firm to increase operational profitability, with EMEA profits declining by almost a third.

For the three months to the end of March, the Phoenix-based firm saw global sales increase two per cent year on year to $1.24bn (£766m). Operating income rose 12 per cent to $25.6m, equating to margins of 2.1 per cent.

EMEA revenue grew four per cent to almost $349m, fuelled by a 22 per cent growth in hardware sales, as measured in US dollars. Hardware now accounts for 42 per cent of turnover in the region, up from 36 per cent in the corresponding period last year. Software has fallen in the sales mix, from 62 to 56 per cent, and revenue in this segment dropped eight per cent this year.

The reverse was true in the reseller's typically more hardware-focused homeland of North America, where a nine per cent annual growth in first-quarter software revenue allowed the region to grow overall sales one per cent to $856.3m.

EMEA was the laggard in the profit stakes in Q1, with operating earnings down 31 per cent to $4.1m. On the other side of the Atlantic, profit was up 28 per cent to $21.1m. This made North American operations more than twice as profitable, with margins of 2.5 per cent, compared with 1.2 per cent in EMEA.

For the full year, Insight is forecasting to grow total sales "in the mid-single-digit range". The VAR's 2011 revenue stood at $5.3bn.

Insight chief executive Ken Lamneck said: "During the first quarter, we focused on integrating recent acquisitions and improving the profitability of our business through gross margin expansion and continued cost control. These efforts led to double-digit growth in earnings from operations ahead of our expectations for the quarter."