Retail meltdown bitchslaps Ingram Micro profits

Q2 revenue skirt lifted by currency updraft

Weakening consumer demand and a botched ERP system migration dampened Q2 profits at broadline giant Ingram Micro but a currency updraft lifted sales.

The largest IT distie on the planet last night reported a near 12 per cent boost in income to $59.7m (£36.6m) and a 7 per cent slide in operating profits to $97.1m (£59.6m) compared to a year ago.

Sales moved up 7 per cent to $8.75bn (£5.36bn) with forex translations pushing up the number by approximately 6 percentage points.

"Demand for commercial technology products has moderated but remains solid throughout the world," said Ingram chief exec Greg Spierkel.

Falling profits were blamed on "business disruptions" related to the transitioning of an enterprise system in Oz, now largely resolved, and pressure on the retail sector.

"Stability in the small and medium business market is offset by soft consumer demand in Europe and parts of Asia-Pacific, which we first began to notice late last year," the bigwig added.

Revenues in North America jumped 6 per cent to $3.76bn and operating profits jumped nearly a quarter to $67.6m.

Sales in EMEA grew 11 per cent to $2.64bn but currency conversions has a positive impact of 13 percentage points and operating profits declined 24 per cent to $16.9m, again due to system upgrade costs and consumer slowdown.

Operations in Asia Pacific and Latin America saw sales rise 5 per cent and 7 per cent to $1.96bn and $360m respectively, while operating profits in those regions fell 44 per cent to $16.5m and grew 35 per cent to $6.5m.

Stockholding grew from 29 days on hand at the end of 2010 to 34 days due to sluggish sales of retail boxes, while op-ex went up to $362.1m compared to $332.9m a year ago.

Spierkel reckoned the outlook for Q3 was more of the same: "We expect global technology demand to remain relatively consistent with the second quarter".

Though he warned that currency conversions that benefited it in Q2 may not swing in its favour "as foreign currencies continue to strengthen". ®