Insight blames public sector for sales dip

Saved by currency tailwind and mid-market push

A strong currency tailwind lifted Insight Enterprises's second quarter sales to growth in Europe as spending cuts in the public sector started to bite.

Favourable forex conversions underpinned a 12 per cent rise in sales to $403m (£248m) but excluding the currency impact, sales were flat with a two per cent dip in hardware negating growth in software and services.

"Some really good growth in the mid-market was offset by a slowdown in public sector," Insight EMEA and Asia Pacific president Stuart Fenton told The Reg.

Public sector sales, described as a "big part of our business", were down double digits – accounting for the slide in hardware – though Fenton said servers, storage and networking had sold well in the mid-market.

"We reacted to government austerity measures by switching focus to mid-market," he said, adding that this resulted in gross profit margins at 15 per cent which fed into a 35 per cent rise in operating profits to $13m (£8m).

For the quarter, Insight EMEA also booked a $2.3m severance and restructuring charge as it made some 50 staff redundant in Germany.

Globally, Insight reported a 16 per cent rise in sales to $1.47bn, a 22 per cent spike in operating profits to $54.4m and a 31 per cent gain in net profits to $35.3m.

This was the fifth consecutive quarter of double-digit growth by the reseller, with North America sales up 14 per cent to $989m and operating profits edging up 11.4 per cent to $36m.

In the Asia Pacific operation, sales grew 82 per cent to $76.8m or 55 per cent excluding currency, as operating profits grew to $5.4m, up from $2.7m a year earlier.

Such was the success of currency hedging in the quarter, Insight's management might want to think about setting up a new operating division. ®