Tech Data's Q3 profits dive by more than a fifth

Currency headwind and price war bitchslap distie giant

The wheels on distribution juggernaut Tech Data (TD) are continuing to slow with sales and operating profits sliding in Q3.

For the three months ended 31 October, turnover fell eight per cent to $6bn from $6.59bn a year earlier but operating profits dived more than 22 per cent to $69.5m.

The distie, which recently closed the acquisition of SDG, said weakening foreign currencies in relation to the dollar accounted for most of the sales decline - a factor that also downed Q2 numbers.

The "presentation" of sales of vendor warranty services and fulfilment contracts accounted for roughly $215m of the revenue dip - again an issue that reared its head last quarter. TD no longer slaps such services under the sales line, it is only now recorded when delivered.

TD CEO Bob Dutkovsky said the financials "fell short of our plan".

"During our third quarter we continued to face weak macro-economic environments and slowing demand, as well as challenges in our US operations following the implementation of certain SAP modules in the second quarter," he said.

The firm said the decline in operating income was due to "competitive pricing, products mix and certain vendor programmes" on both sides of the pond.

The North America operation led the sale div, down 15 per cent year-on-year to $2.37bn and operating profit was $33.7m down from $52.6m.

The decline was less marked in Europe with sales down four per cent to $3.67bn and earning from operations was $39.4m down from $39.7m.

Low single digit sales growth is forecasted for the final quarter of TD's fiscal 2013 that ends January. ®