Second quarter sales climb at Ingram Micro

by Stuart Wilson, Friday 30 July 2010

Gregory Spierkel, CEO at Ingram Micro

Global distribution giant Ingram Micro has announced second quarter sales up 24% year-on-year at US$8.16 billion. For the quarter ending July 3rd 2010, after-tax profits more than doubled to hit US$67.7m – compared to US$25.3m a year earlier. Sales in EMEA were up 18% year-on-year at US$2.37 billion with operating profits of US$22.3m.

"Our ability to generate robust sales growth while controlling operating expenses resulted in significant operating leverage, driving net income and EPS to the highest second-quarter levels in our history," said Gregory Spierkel, CEO at Ingram Micro. "Every region performed well, with our two largest regions doubling and tripling operating profits on double-digit sales growth.”

“Our notable progress is a function of proactive vendor and customer engagement, new tools and programmes embraced by our customers, and expanded solutions in key adjacency areas such as data capture, point of sale and data centre support. We are excited by the opportunities ahead as we continue to successfully execute against our plan to the benefit of our customers, vendor partners and shareholders," he added.

Ingram Micro’s gross margin dropped to 5.36% from 5.87% a year earlier, which the distributor attributed to a strategic decision to leverage gross margin to drive growth and higher profits. Ingram Micro also claimed that last year’s gross margin percentage was exceptionally high and this year’s fall was partly due to a greater mix of lower margin products.

William Humes, senior executive VP and CFO at Ingram Micro, added: "Despite our investments in growing the business and share repurchases, our balance sheet remains strong. Return on invested capital (ROIC)continues to improve, maintaining a trend of ROIC exceeding our weighted average cost of capital for the last four quarters. Working capital management remains solid. Our robust sales and profit growth demonstrate our ability to carefully leverage key areas of the business to drive excellent overall performance."

Spierkel continued: "For the third quarter, we expect revenues to be generally flat sequentially, in line with normal historical seasonality. Year-over-year sales comparisons are expected to be more modest than the prior two quarters, as our energised sales efforts had a positive effect starting in the third quarter of last year. Gross margins should remain relatively stable as we continue to strategically and surgically drive sales when it makes sense. We will continue to hold the line on costs, which should drive operating leverage."

"Based on our success in the first half of 2010, I am excited about our prospects for the balance of the year. We’ve made substantial progress with our strategy, building expertise in high-demand and advanced-technology market segments while improving our core business. Our team is energised, taking advantage of favourable market conditions and cultivating sustainable capabilities for long term growth and profitability," he concluded.