Bell chimes in with sales and profit boost for Avnet UK in FY11

First UK figures featuring contribution from acquisition show margin boost as US giant nears £1bn mark in UK

Avnet's first published annual UK results since its blockbuster acquisition of Bell Micro show, in part, the big positive impact the deal has had on the distributor's revenue and profitability.

In documents recently filed with Companies House, Avnet Technology Solutions UK showed a 133 per cent sales increase in the year to 2 July 2011. Turnover figures include, for the first time, a full year of sales from 2008 acquisition Horizon, as well as a five-month contribution to the top line from Bell.

Recorded sales for the year stood at £532.5m, while gross margins spiked from 8.4 to nine per cent. But integration costs added to the burden of administrative expenses, which rose as a percentage of revenue from 7.7 to 8.4 per cent.

Consequently, operating margins were dragged down. FY11's operating income of just under £3.2m equates to margins of 0.6 per cent, down from 0.7 per cent in the prior year.

The inclusion of Horizon and Bell figures has also had a massive impact on the number of staff on Avnet TS' UK books, rising from a monthly average of 133 in FY10 to 725 in FY11. Some 607 employees work in the sales operation, with 118 on the admin side.

The directors' report for the year claimed growth had come not only from the duo of acquisitions, but from "the continued development of the established partner base".

"While the general economic and market trading conditions continue to be highly competitive and challenging, the company has an established partner, supplier and employee base that continues to contribute to the growth of the business," adds the report.

UK results for the other chunk of Avnet's business, the components-focused EMG arm, were filed earlier this year. Once again the impact of an acquisition - in the shape of Abacus, acquired in January 2009 - helps puts a healthy sheen on the numbers.

Avnet EMG Limited in the UK operates primarily via a commissionaire's agreement with its European parent. During FY11 revenue throughput rose 57 per cent to £190.1m, while the division also booked net revenue of £19.7m.

With a full-year's revenue from Bell factored into Avnet's current fiscal year, which closes in about a fortnight, fairly modest organic growth would ensure the US giant becomes a £1bn operation in the UK.