Ingram Micro’s chief remains confident its optimisation plans will help the distributor get through the recession, despite a double-digit drop in quarterly global and regional revenues.
The distributor reported worldwide sales of $US6.75 billion ($9.1 billion) for the 13 weeks to April 4, 2009, down 21-per cent year-on-year. The distributor claimed weaker foreign currencies effected its first-quarter results by eight percentage points.
Across Asia-Pacific, sales were down 24 per cent to $US1.38 billion, or 24 per cent of total revenues. Ingram also blamed weaker regional currencies for the severe drop, which it claimed had an approximate 12 percentage-point negative effect year-on-year.
Ingram’s Asia-Pacific operating income was $US13.8 million, against $US45.2 million worldwide. This compared to an operating income of $32.5 million or 1.79 per cent of revenue, in the year-ago quarter. According to the financial statement, the distributor spent $1.7 million on cost reductions programs in Asia-Pacific during the quarter.
“The year-over-year decline is a reflection of the overall weakness in the Asia-Pacific market in the current year,” the statement read. On a more positive note, Ingram claimed gross margins remained solid at 5.65 per cent globally.
Ingram global CEO, Greg Spierkel, said optimisation plans had been instigated in all regions over recent months to improve business processes. Earlier this year, the distributor announced several redundancies across its Australian business, and also closed offices in Canberra and Adelaide as part of efforts to reduce operational expenditure.
“While the soft macroeconomic environment continues to dampen sales, we are making excellent progress toward improving long-term profitability and re-shaping our business to help us emerge from the downturn stronger and more agile,” Spierkel said in the statement.
Ingram will continue to invest in customer service, e-commerce and marketing capabilities, Spierkel said. He flagged Ingram’s recent acquisition of point-of-sale distributor, Vantex, and Value Added Distributors in New Zealand, as indicative of efforts to grow into complementary markets.
Spierkel warned sales were unlikely to pick up for several months, given the impact of the recession across all markets.
“We expect year-over-year sales comparisons [in Q2] to be negatively affected by the translation impact of relatively weaker foreign currencies as well as the timing of the Easter holidays, which occurred in the first quarter in 2008 and in the second quarter this year,” he stated. “We should see additional benefits of our expense-reduction programs. The results of last year's program are now fully realised, generating annualised benefits of more than $US20 million. We're beginning to gain traction with the program that we announced during the first quarter of this year, which generated some savings during the first quarter and is expected to have a greater impact in the second quarter and thereafter, reaching its annualised run-rate of $100 million to $120 million by the end of the year.
“I'm confident that the actions we're taking today will make us stronger and more profitable when demand returns."