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European weakness a concern for Avnet

Simon Quicke
Continued weakness in the European market remained a concern for Avnet as other geographies showed signs of coming out of recession much quicker.

The distributor highlighted a relatively slow revenue growth rate of just 2.5% in EMEA for its Technology Solutions operation compared to 14.1% in the Americas and 87.6% in Asia in its fiscal Q3 numbers, for the three months ended 3 April.

Overall the distributor saw net sales increase by 28.5% to $4.7bn (£3.12bn) from $3.7bn in the same quarter last year and GAAP net income increased by 624% to $114.5 m from just $15.8m in 2009.
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Roy Vallee, CEO at Avnet, ( pictured) said that growth was accelerating and its results showed the strength in the pace of recovery: "T he pace of recovery in our served markets remained strong this quarter as our year-over-year growth rates accelerated and revenue exceeded expectations at both operating groups for the third consecutive quarter."

But when it came to discussing the performance of the Technology Solutions business Vallee shared his worries about the disparities in the performance of different territories.

"The recovery in IT spending is evident in the Americas and Asia regions while demand in EMEA remained relatively weak. Technology Solutions operating income margin grew slightly year over year while we remain in an investment phase in Asia and manage through a challenging environment in EMEA.," he said.

With the dust barely settled on the announcement of the Bell Microproducts acquisition there was a clear indication from Avnet CFO Ray Sadowski that there was still money in the pot to fund further growth.

"We ended the quarter with $1.5bn in liquidity to support continued profitable organic and M&A growth," he said.

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