Sales up but profit down at Ingram Micro

SANTA ANA, Calif. – Ingram Micro Inc. said its worldwide sales for the most recent quarter were $8.25 billion (all figures in U.S. dollars), a nine percent increase from in the prior-year period.

Net income for the first quarter was $37.0 million, which it said was at the high end of the earnings guidance it issued March 1. But it was almost half the $61.7 million earned a year ago.

“The technology markets in all our regions are generally solid, driving another first quarter sales record,” said CEO Gregory Spierkel. “We are also especially pleased with the performances of North America and Asia-Pacific, where operating income grew at more than twice the rate of sales, reflecting our successful efforts toward diversification into adjacencies and geographies. The Brazilian tax charge and our efforts to gain share in Germany dampened income in the other two regions, but we believe these markets will generate more fruitful results in the months ahead.”

The translation impact of the relatively stronger European currencies had an approximate three percentage-point positive effect on comparisons to the prior year, the company said.

North American sales were $3.28 billion (40 percent of total revenues), an increase of two per cent, versus the $3.21 billion posted a year ago.

European sales were $3.05 billion (37 percent of total revenues) versus $2.70 billion in the year-ago period. Sales in U.S. dollars were up 13 percent over the prior-year period. The translation impact of the relatively stronger European currencies had an approximate 10 percentage-point positive impact on comparisons to the prior year.

Asia-Pacific sales were $1.57 billion (19 percent of total revenues) an increase of 18 per cent over last year, while Latin American sales were $346 million (four per cent of total revenues), a decrease of three per cent compared a year ago.

The charge related to Brazilian commercial taxes adversely affected the gross margin by approximately 41 basis points, resulting in a gross margin of 4.96 per cent versus 5.34 per cent in the year-ago quarter. The negative impact was partially mitigated by general enhancements in the gross margin in certain regions over the prior year.

Total operating expenses were $335.1 million or 4.06 percent of revenues versus $306.6 million or 4.04 percent of revenues in the year-ago quarter. The percentage-of-sales increase is largely attributable to increased European costs associated with the previously disclosed warehouse management system upgrade in Germany.

In the second quarter ending June 30 sales are expected to range from $8.00 billion to $8.25 billion, while net income is expected to range from $59 million to $65 million.

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