SDG buoys Q3 for Tech Data
Distribution behemoth faces sales slump without positive influence of former SCC distie arm
Tech Data was saved from a disappointing third quarter 2013 by the positive influence of its biggest purchase, SDG.
The distribution giant has recently completed a 10-month independent probe into its UK and European accounting practices and has been forced to restate some or all of its numbers for the past three years after discovering "accounting improprieties" in its UK business.
It acquired SDG from SCH Group in 2012 for €277m (£228m), one of the largest deals in distribution history.
Net sales for the third quarter ended 31 October 2013 were $6.4bn (£3.8bn), up six per cent from the same period the previous year. But excluding the net sales of SDG, Tech Data’s sales decreased about seven per cent from the year-ago quarter.
In Europe the SDG effect was more pronounced, with sales increasing four per cent for the quarter overall, but with SDG taken out of the equation, sales plummeted about 16 per cent in euros, and 12 per cent in US dollars.
Profit took a similar hit in Europe, with operating profit hitting $12.2m for the quarter, compared with $34.5m in the same quarter a year ago. It fared slightly better in the Americas, with operating profit standing at $53.3m for the quarter, compared with $32.m a year ago.
Looking at the nine-month period, overall net sales hit $18.8bn, an increase of five per cent on a year ago. But taking SDG out of the equation, the firm reported a consolidated net sales drop of five per cent.
In Europe for the same period, net sales were $11.3bn, up six per cent with SDG figures included, and down 11 per cent in euros without its influence.
According to Tech Data, the decrease in net sales excluding SDG was primarily attributable to weak economic conditions in certain countries, as well as a decline in market share in some territories resulting from competitive pressures.
The firm is still sitting on a net cash pile of $266m, it revealed.
Robert Dutkowsky, chief executive of Tech Data, said: “Today's filing of our quarterly reports for the first nine months of fiscal 2014 is an important milestone for our company.
"Our financial results through October 31 2013 reflect our efforts to regain selected market share in the Americas, further integrate our acquisitions in Europe and focus on profitable business, all while managing a rapid change in product mix. The past year has presented us with a unique set of challenges, but we are confident the company is emerging stronger and with a renewed energy to drive our business forward.
"We thank our shareholders for their patience, our customers and vendor partners for their continued support, and our employees for their perseverance and hard work during the past few quarters," he said.
For its fourth quarter and FY results, the firm said it expects to announce these "concurrent with the filing of its Annual Report on Form 10-K for the fiscal year ended 31 January 2014".