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Avnet Q2 brings greater profit returns for distributor

Alex Scroxton

Despite booking a very slight year-on-year dip in sales to $6.69bn (£4.27bn), Avnet CEO Rick Hamada was in bullish mood as he looked back on his first six months in charge, a period that saw improving profitability at its VAD division Avnet TS, as well as higher HDD prices, factors that came together to boost adjusted earnings per share by 7%.

"With [components division] Avnet EM expected to return to more normalised seasonal growth ... and an outlook for continued investments in IT datacentres, we remain confident we can continue to grow earnings organically," said Hamada.

The CEO also opened the door to the possibility of acquisitions, adding that the firm would "supplement that growth with investments in value creating M&A."

Across the business, GAAP net income rose 4.2% to $147m, and EPS by 7.7% to $0.98, Avnet revealed.

By operating segment, Avnet EM saw sales drop 3.5% (12.8% in EMEA) to $3.59bn as a cyclical supply chain correction knocked back sales. Operating income was down 4,6% to $174.9m, although it should be noted that operating income margin was better than expected thanks to the impact of HDD price rises following the Thai floods.

Avnet TS, meanwhile, saw sales grow by 2.5% over the same period last year to $3.09bn, although the bulk of this growth was generated in Asia as the EMEA operation booked a 6.1% decline. Operating income climbed by $13.7m over Q2'11 to $118.9m.

"TS leveraged the typical year-end seasonality into improved profitability with all three regions contributing meaningfully," said Hamada.

"In EMEA, our continuing focus on profitable growth and restructuring initiatives combined to drive operating income ... and operating income margin up," he reported. "TS remains well positioned to translate continued demand for datacentre solutions into higher earnings and returns."

 


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