EMEA and Asia let Avnet down in Q1 financials

Overall growth in both Electronic and Technology Solutions divisions was fuelled from strongest Americas region performance in three years

Avnet is hailing the end of a successful first quarter of its 2015 financial year, after overall turnover grew for the period.

But EMEA and Asia were the weakest performers for the quarter, with the Americas earning the 'star performer' badge.

In its latest financial statement, the distribution behemoth singled out its Americas business for praise, which grew for the first time in three years, helping group revenue to grow 7.8 per cent to $6.83bn, and net profit to grow by 6.1 per cent to $127.9m.

Rick Hamada (pictured), CEO of Avnet said in a statement: “Our team carried the momentum of fiscal 2014 into our new fiscal year as they leveraged continued revenue growth into another year-over-year increase in EPS. At an enterprise level, year-over-year organic revenue grew 5.6 percent in constant dollars led by a sixth consecutive quarter of year-over-year organic growth at Electronics Marketing (EM), along with a return to positive growth at Technology Solutions (TS).

“Even given an environment of heightened sensitivity to current market conditions, we remain focused on profitable growth opportunities and will continue to align our investments toward maintaining our momentum.”

Praising the Americas region, Hamada added: "During our September quarter, TS delivered top-line growth of 2.4 per cent year over year driven by strength in our Americas region, which experienced double digit organic growth for the first time in three years.”

But EMEA wasn’t quite as strong for the firm, with the region’s performance declining 5.8 per cent in constant currency, with single-digit growth in the core distribution business offset by a decline in the computing components business.

“In our TS EMEA region our team has been driving efficiencies as operating income margin improved both sequentially and year over year,” he said. “Going forward, we will continue to utilise our disciplined portfolio management to ensure we are focusing our resources on high growth opportunities in the enterprise IT ecosystem."

Hamada said TS Asia was below expectations in the quarter, with revenue declining 14.6 per cent sequentially.

Kevin Moriarty, CFO at Avnet, added: "We used roughly $41m in cash flow to fund operations for the quarter asthe working capital grew to support our organic sales growth. Despite the use of cash during the quarter, the trailing twelve months cash flow generated from operations improved by 36 percent to $323m, and we exited the quarter with roughly $814m of cash on our balance sheet.”