Arrow CEO hails shift in focus despite sales drop

Arrow CEO Michael Long says its Enterprise Computing Solutions divison (ECS) successfully shifted its business from hybrid cloud to home working solutions as it posts figures for its first quarter of 2020.

ECS saw sales drop six per cent to $1.83bn (£1.47bn), while revenues for the wider Arrow Electronics group decreased by 11 per cent to $6.38bn.

Group net income for plummeted 64.5 per cent to $50m.

Long pointed the finger at "the unprecedented challenges associated with the COVID-19 pandemic."

"I am grateful to our dedicated teams in all regions who have been working with urgency to ensure our customers and suppliers are well equipped to continue their business operations in the current environment," he said.

However, Long claimed that its ECS business still fared near "the high-end of our prior expectations".

"In connection with our shift from provisioning complex hybrid cloud solutions to rapidly enabling the massive migration to an at-home workforce, Arrow reported global enterprise computing solutions sales near the high-end of our prior expectations."

Regionally, the company's ECS business saw the biggest drop in sales in Europe, down eight per cent to $702.19m (€647.28m).

In the Americas, ECS sales dropped by six per cent to $1.19bn (€1.1bn).

Component sales still earned the lion's share of the US distributor's top line.

"Despite production stoppages, border closures and stay-at-home orders, our global components team demonstrated unwavering focus on our customers' needs in the production of vital electronic equipment, delivering first-quarter financial performance consistent with pre-pandemic expectations," Long said.

However, there too sales were down in all regions. The America's saw the biggest drop, down 18.6 per cent to $1.55bn (€1.43bn). Meanwhile Europe and Asia saw decreases of 12.9 and 5.3 per cent to $1.31bn ($1.21bn) and $1.69bn (€1.56bn) respectively.

The company's CFO Chris Stansbury said he anticipates the company's top line recovering in Q2.

"We anticipate a cautious, measured return to normal business activity," he said.

"Arrow is well positioned to continue benefiting from the robust cash flow our business generates. First-quarter cash provided by operating activities was $467m thanks to our disciplined working capital management, including our new EMEA asset securitisation program, and efficiencies from our previously announced cost optimisation program."

Last year, Arrow made savings by axing the distributor's IT asset dispositional (ITAD) unit, citing difficulties in making it profitable.

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