Dutch holding company Hagemeyer, the current owner of broad-based IT distributor Tech Pacific, has released financial results confirming that IT distribution was a tough business to be in during 2001.
Net sales for Hagemeyer's Information Technology Products and Services (ITPS) division, comprising Tech Pacific's operations throughout the Asia-Pacific region along with Dutch-based distributor Codis, fell by around 13 per cent during the year.
At Tech Pacific specifically, organic growth in the second half of 2001 was negative 7.1 per cent, while its gross profit margin dropped by 1 per cent. A statement by Hagemeyer put the poor results down to a "continuing weakness in IT markets worldwide, exacerbated by extremely poor conditions in the Australian market in particular".
The statement said that the reduction in gross profit margin was a result of intense price pressure brought about by competing vendors struggling to maintain market share. This put considerable strain on IT distribution.
Australia was pointed out as the weak point for the division's operations over the course of the year. The second half of 2001 saw Tech Pacific undergo a "cost reduction" program in which staff numbers were reduced by 30 per cent.