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Tech Data hit by strong dollar and weak global economy

Simon Quicke
file000716464570.jpgTech Data has blamed the performance of the dollar against foreign currencies as one of the contributing reasons for a lower year-on-year performance in its fourth fiscal quarter.

The distribution giant was also at the mercy of the global economic situation which saw its revenues in Europe rise by just a couple of percent to $4.37bn (£2.74bn) compared to the same period last year.

Net sales in its native market and the rest of the Americas fell by 1% from the year before to $2.74bn and the distributor is exiting the Brazilian and Colombian markets.

For the three months ended 31 January net income was $54.1m compared to $77.3m for the year before and net sales stayed almost on a par at $7.112bn.
Although the sales in Europe dropped by just a couple of percent the distributor worked hard in the region to control its outgoings introducing a restructure that contributed $11m in costs as it realigned its business in the region.

Robert Dutkowsky, Tech Data's CEO, said that overall it was encouraged by a strong finish to its fiscal year, "despite a slowing overall IT market and challenging macro-economic environments in certain European countries".

"In the fourth quarter we took steps to further strengthen and better position the company for the future by exiting unprofitable markets, aligning our European cost structure to more closely match market conditions, investing in industry-leading initiatives and enhancing our capital structure," he said.

The distributor was fairly realistic about the prospects for its new fiscal year stating in its results, that it expected "regional sales comparisons to range from slightly positive to slightly negative, resulting in flat sales for the fiscal year, in local currencies".

"However, the company believes its diverse product portfolio, proactive steps taken, and investments made, will support its operating margin goal of approximately 1.5 percent for the fiscal year," it stated.



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