Ingram boss spots signs of recovery despite EMEA market sales dip


Ingram boss spots signs of recovery despite EMEA market sales dip

Simon Quicke

Ingram Micro has indicated that it is going to keep the pressure on making cost reductions and focus on growing incremental sales as it looks towards a market that appears to be returning to seasonal patterns.

The distributor revealed a 25% drop in revenues for its second quarter ended 4 July, reporting $6.58bn (£4bn) compared with $8.82bn a year earlier, and net income halved to $25.3m, compared with $58.9m in the same period a year before.

Sales in EMEA dropped 32%, the worst performing region for the distributor, impacted by weak European currencies and "soft demand" from European economies.

Operational improvements

Despite the numbers, Ingram Micro CEO Greg Spierkel said the efforts it had made to focus on invested capital, sustainable profitability and productivity had worked.

"Since we first experienced the effects of the downturn early last year, we have focused on operational improvements directly within our control - such as managing working capital and expenses, shedding under performing operations and enhancing gross margins - which are generating visible results. With many of the improvements behind us, we are now in a position to leverage our strong balance sheet and improved infrastructure to begin driving towards pre-recession operating levels," he said.

Part of the plan to return to profitability involves turning around the performance in EMEA and maintaining the cost controls, which is so far producing savings of $5m per quarter.

Seasonal patterns

Spierkel made cautious noises about the prospects for the third quarter, suggesting that the market appeared to be returning to seasonal patterns, which would imply that things should pick up after August.

"We expect the overall demand environment to follow historical seasonal patterns. While we do not anticipate an economic rebound in the near term, our larger regions will begin to leverage some of the benefits of our recent cost-reduction and operational-improvement actions," he said.

"Our customers are fundamentally sound, but they remain understandably cautious until more economic indicators turn positive. We believe we are making the right moves to navigate this recovery period successfully and create a foundation for a more prosperous future," he added.

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