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Synnex reports earnings decline and tight margins, but stays in the black

DistributionSynnex

Distributor Synnex Corp. reported its first quarter financial results on Thursday, recording net income of $33.4 million on revenue of $2.4 billion (all figures US$).

Revenue was unchanged from the same quarter a year ago but net income was down, declining 12.7 per cent from the year ago figure of $38.2 million. Operating income was also down 12.6 per cent to $55.9 million, and operating margin was off by 33 basis points, to 2.27 per cent.

“I am pleased to report solid quarterly results even as compared to the prior year’s exceptional profits which benefitted from the hard drive shortage and considering the recent weakening of key foreign currencies such as the yen. Steady operational execution within the core Distribution Segment aligned well with our mix shift into higher margin product and service offerings, including in our Technology Solutions Division,” said Kevin Murai, Synnex president and CEO, in a statement. “Our GBS Segment’s strong revenue growth continues, driven by strategic investment and increasing momentum in our rapidly growing Concentrix business.”

Looking ahead to Q2, Synnex said the outlook remains mixed in the short-term, forecasting revenue in the range of $2.425 billion to $2.525 billion, and net income of between $29.8 million to $31.0 million.

“We anticipate that IT demand will remain mixed for products we sell and geographies we operate in. In addition, ongoing competitive pricing and a more limited ability to earn incremental incentives will impact our gross margin this quarter.” said Murai. “Despite the near-term challenges, however, we remain focused on growing our business and expect our margins to improve in the second half of the year.”