Ingram Micro Q2 global net income down on back of Australian ERP transition problems

Ingram Micro Q2 global net income down on back of Australian ERP transition problems

But CEO Spierkel optimistic the worst is over locally

Ingram Micro has reported a worldwide sales increase of 7 per cent compared with same quarter last year. However, problems associated with transitioning to the new enterprise system in Australia were again blamed for a decline in the company’s net income.

Net income was $US59.7 million, or $US0.37 per diluted share, compared with $US67.7 million or $US0.41 per diluted share in the second quarter of 2010.

Worldwide sales were $8.75 billion up from $8.16 billion reported in the second quarter of last year. The translation effect of foreign currencies had a positive impact of about six percentage points on the prior-year comparison.

CEO Greg Spierkel, said in a statement, “The decline in net income is primarily related to business disruptions associated with transitioning to the new enterprise system in Australia, as the company previously disclosed.

“The system and process issues were largely resolved in the second quarter and the company is now focused on regaining Australian market share.

Spierkel said, in the third quarter, Ingram expects global technology demand to remain relatively consistent with the second quarter.

Sequential sales growth should be roughly in line with historical seasonality, resulting in continued year-over-year revenue growth.

“The Australian business should deliver some sequential improvement but will continue to lag last year's results,” he said. “Third-quarter expenses may experience the negative effect of currency translation as foreign currencies continue to strengthen compared to last year."

Looking further ahead, Spierkel underscored the company’s belief that its investments in system enhancements and other strategic initiatives would result in a more diverse, efficient and truly global company.

He said demand for commercial technology products has moderated but remained solid throughout the world. Stability in the small and medium business markets was offset by soft consumer demand in Europe and parts of Asia-Pacific, which the company first noticed late last year.

"In this environment, we continue to focus on business enhancements - from infrastructure improvements to growth initiatives - that will drive better service for our business partners,” Spierkel stated.

“The most significant of these improvements is our global migration to a new enterprise system, which will ultimately accelerate decision-making and enhance customer service with real-time, comprehensive data. This new system is critical to our strategy of being a highly efficient, globally unified logistics provider, and we believe the long-term benefits outweigh the challenges we encountered in Australia.

“In other strategic initiatives, we launched our new cloud marketplace during the quarter and we're encouraged by our early market position and the favorable response from our partners, with scores of vendors and solutions on board."

In North America sales increased 6 per cent to $US3.76 billion (43 per cent of total sales) Europe, Middle East and Africa (EMEA) sales grew 11 per cent to $US2.64 billion (30 per cent); Asia-Pacific sales increased 5 per cent to $US1.96 billion (22 per cent); Latin America sales increased 7 per cent to $US387 million (5 per cent).

Worldwide operating income totaled $US97.1 million or 1.11 per cent of total sales, compared with $US104.6 million or 1.28 per cent of total sales last year.

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Tags ERPIngram MicrodistributionGreg Spierkelworldwide results


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