Tech Data completes quartet of broadline top-line declines
C2000 parent becomes the latest of the big four to show a quarterly sales decrease but profitability is on the up
Tech Data has become the latest distribution giant to endure a quarterly sales decline, meaning that all of the big four US disties have posted a revenue contraction within the last month.
For the three months to the end of April, the Floridian firm saw its first-quarter global revenue fall seven per cent annually to $5.9bn (£3.7bn). Rivals Arrow, Ingram Micro and Avnet have all posted quarterly sales declines in the last few weeks.
Tech Data claims a four per cent decline can be attributed to the weakening of various currencies against the US dollar.
The remaining three per cent is also brushed off, with the distributor claiming that a change in the way it recognises warranty services sales on its balance sheet wiped $200m off its top line in Q1. Excluding these factors - as well as the firm's exit of the Brazilian and Colombian markets at the end of the 2012 fiscal year - the company claims it would have posted a marginal sales increase in Q1.
Operating profit for the quarter grew 6.9 per cent to $80.9m, equating to an increase in operational margins from 1.2 to 1.37 per cent.
During the quarter both the Americas and Europe posted a year-on-year turnover decline, with the former seeing sales shrink six per cent to $2.5bn, and the latter seeing its top line fall seven par cent to $3.4bn.
Tech Data's Americas business continues to enjoy operating margins of more than double those of its European counterpart. During Q1 the distributor's European arm saw operating profit rise 7.6 per cent to $30.3m, equating to a rise in margins from 0.81 to 0.95 per cent. Across the Atlantic income grew 6.7 per cent to $51.1m as margins rose from 1.83 to 2.08 per cent.
For its second fiscal quarter Tech Data is expecting sales to be more-or-less flat sequentially. Another year-on-year decline is already being partly chalked up to the change in warranty services revenue recognition and the Latin American divestments.
The distributor also cites "general market conditions" and "our selective approach to capturing profitable market share" as factors likely to impact on its top line in Q2.
Tech Data chief executive Robert Dutkowsky: "We are pleased to report a solid start to fiscal 2013 with record first quarter operating income, net income and earnings per share.
"Our performance clearly demonstrates that despite volatile and uncertain markets, our strong operations, flexible business model and strategy of execution, diversification and innovation enable Tech Data to capture profitable market share and to deliver strong results to our shareholders."