Restructuring costs blow $175m hole in Ingram's profits
Blockbuster Tianjin Tianhai buyout pushes world's largest distributor into the red in its fiscal fourth quarter
Restructuring, merger, and transition costs related primarily to the sale of Ingram Micro to Chinese conglomerate Tianjin Tianhai have blown a $175m hole in Ingram Micro's profits for the fourth quarter of 2016.
The broadliner's fourth-quarter revenues saw growth, with global sales hitting $12.24bn (€11.24bn), climbing eight per cent year over year in US dollars. Converting foreign currencies reduces global sales growth by two percentage points on an annual basis, to six per cent, claimed Ingram.
For the three months leading to 31 December 2016, the distributor's GAAP operating income shrank by 97.54 per cent year over year to $4.82m from $196.1m reported during the same period last year. Net income saw an even steeper decrease for the quarter, plummeting from the $141.2m reported in Q4 of 2015, to a $34.65m loss this year.
Ingram claims that Ingram's $6bn sale to Chinese conglomerate HNA Group's subsidiary Tianjin Tianhai that was announced in February of last year - and which closed during its fourth quarter at the start of December - had a significant impact on the firm's GAAP profits for the period. The distributor claims that it spent $175m on restructuring, merger and transition costs and $25m on amortisation expenses during the quarter, primarily as a result of its sale to HNA.
Non-GAAP profit also saw a year-on-year slump, with non-GAAP operating income reaching $206m for the quarter - a 13 per cent year-over-year dip.
Ingram claims that non-GAAP profits "were impacted by a higher mix of sales of consumer-focused product lines, particularly smartphones in international markets, as well as by underperformance in some European countries and in the company's US mobility business".
On a geographic basis, European sales in Q4 saw growth on a yearly comparison - after the region's sales fell by almost a fifth in Q4 of 2015 - posting $3.62bn in revenues up from $3.38bn from the corresponding quarter of last year.
North America also posted year-on-year growth, as revenues grew by 3.83 per cent to $4.84bn. APAC saw the highest annual growth, seeing a 19.91 per cent boost to $3.01bn. Lastly, Latin American sales came in at $768m, up from $757.9m reported in Q4 of 2015.
Ingram's full-year 2016 revenues fell by two per cent to $41.93bn on a year-over-year comparison. GAAP operating income fell by 33.12 per cent year on year in Q4 of 2016 to $277.74m.