UK accounts probe fallout puts $12m dent in Tech Data profit

Distribution titan hails 'good start to fiscal year', despite restatement costs hurting profitability

The fallout of its UK accounting foul-up put a $12m (£7.2m) dent in Tech Data's operating bottom line during its fiscal first quarter.

For the three months to the end of April the distie giant saw revenue grow nine per cent year on year to $6.7bn. Both the Americas, where turnover grew eight per cent to $2.5bn, and Europe, with sales up 10 per cent to $4.25bn, showed solid growth.

But global operating income was down by $4.5m on the corresponding period last year, coming in at $31.5m. This equates to a drop of 17 basis points in margins, which stood at 0.59 per cent. The operational bottom line was hit to the tune of $12.2m by expenses related to the restatement of accounts.

Tech Data announced 14 months ago that it would be restating some or all of its numbers for the three preceding years, following the discovery of "accounting improprieties" in its UK business. The company completed a 10-month probe earlier this year, but UK accounting watchdog the Financial Report Council began an independent investigation "in connection with" the firm, but was unable to reveal any further details as to nature of its interest.

For its second quarter, which runs until the end of July, Tech Data is anticipating "sales growth of low-to-mid single digits", with gross margins "in line with recent levels."

"We are pleased to report a good start to fiscal year 2015," said chief executive Robert Dutkowsky. "Our focus on execution, supported by an improved IT demand environment, resulted in record first-quarter sales, nearly double-digit year-over-year growth in non-GAAP earnings and strong operating cashflow.

"Growth in first-quarter non-GAAP earnings exceeded our expectations, demonstrating our ability to achieve solid operating performance when we focus on and respond to the realities of the market. We believe our focus on the marketplace and operations will enable us to build upon this momentum during fiscal 2015 and beyond."