World's biggest distie Ingram gets even bigger

Q4 sales rise 18 per cent although pricing pressure bashes European margins

A steep fall in European profit margins took the gloss off an otherwise impressive set of quarterly numbers from the world’s largest IT distributor, Ingram Micro.

The New York-listed behemoth saw global revenues mushroom 18 per cent to $14bn (£9.1bn) in a fourth-quarter period that benefited from having an extra, 14th week tacked on.

Operating profit for the period ending 3 January rose 16 per cent to $201m, while net profit clambered six per cent to $119m in a set of results chief executive Alain Monie branded “excellent”.

“We continued to grow revenue well above market rates, resulting from strong performance across all regions and in all our major product and services lines, including accelerated growth rates in mobility, supply chain solutions and cloud,” Monie said.

European revenues rose three per cent year on year in US dollars and 11 per cent in local currency to $4.2bn.

However, Ingram said the region was a drag on its bottom line as European non-GAAP operating margins slumped from 1.88 to 1.27 per cent year on year.

The broadliner put this down to the strengthening US dollar, a shift in product mix towards more consumer deals, and competitive pricing pressure.

When pressed on this by an analyst on Ingram’s earnings call, chief operating officer Paul Read said he expected European margins to recover quickly.

“Q4, I think, was quite an abnormal blowout for us on the retail side, the consumer space,” he said during the call, a transcript of which can be found here. “No doubt, the foreign currency movements have affected demand, pricing and all those aspects. We've got vendors who are changing back-end rebate programmes. We've got price increases from vendors…”

During the quarter, HP represented 12 per cent of Ingram’s revenues, and Apple 11 per cent.

For the full year, Ingram saw operating profit fall five per cent to $487m on revenues that rose 13 per cent to $676m.

The distributor said it expected growth rates to "moderate somewhat" in 2015.