Ingram Micro returns to growth

Sales for the world's largest technology distie have bounced back in the fourth quarter, providing some optimism in an otherwise sombre earnings call for its full year results.

Ingram Micro's worldwide sales declined by 14 percent for the twelve months ending January 2 compared to the previous corresponding period. Ingram reported worldwide sales of US$29.52 billion (A$33 billion).

Total annual sales in the Asia Pacific came in at US$6.24 billion (A$6.98 billion), a 10 percent decrease from the previous corresponding period. North America reported US$12.33 billion (A$13.79 billion), a 13 percent decrease.

Ingram Micro CEO Greg Spierkel said that aside from the weaker economic climate, the drop in sales could be attributed to "softer revenues in the logistics unit, weaker margins in the consumer electronics unit and a greater mix of businesses in lower margin markets".

Light at the end of the tunnel

The distie's fourth quarter results suggest a turnaround is on the cards.

Worldwide sales increased by one percent for the fourth quarter, compared to the previous corresponding period.

In the fourth quarter of 2009, Ingram Micro reported US$8.81 billion in sales compared to $8.68 billion in the fourth quarter of 2008.

Sales in Asia-Pacific grew 16 percent to US$1.72 billion (A$1.93 billion), representing 19 percent of Ingram Micro's total sales, versus US$1.49 billion (A$1.67 billion) reported in the year-ago quarter.

North American sales were US$3.59 billion, 41 percent of total sales, a decrease of five percent on the US$3.80 billion (A$4.25 billion) reported in the year-ago quarter.

"In the fourth quarter we returned to year-over-year revenue growth for the first time in six quarters despite one less sales week than the prior year period," Spierkel told a webcast this morning.

"We closed the year with glimmers of a strong market - it's a far cry from how we started the year," he said.

China led the charge for Asia Pacific followed by Malaysia, Singapore and Thailand which reported growth. India, Australia and New Zealand were "softer than the regional average" but entered the new year with plans for growth, he said.

"Australia and New Zealand are building their enterprise businesses through both organic expansion and last year's acquisition of a value-added distributor [Vantex].

"Beyond the individual countries, the regions data capture business is doing well following the acquisition of Vantex, the largest data capture point of sale provider in the Asia Pacific. The integration is completed and adding to the region's profitability."

Worldwide operating income (the measurement of profitability that excludes interest and income tax expenses) was US$146.5 million (A$163.83 million). In the prior-year quarter, the company posted an operating loss of US$597.1 million (A$670.11 million) which included a goodwill impairment charge.

Asia Pacific operating income was US$25.7 million (A$28.8 million) in the comparable period in the prior year, Asia Pacific's operating loss was US$444.1 million (A$498.2 million), which included US$475.3 million (A$532.4 million) of the goodwill impairment charge.

"Operating income was solid nearly back to 2008 levels indicating we're turning a corner for the first time since the recession began," Spiekel said.

"As we look back on 2009 we see a year of two halves. The first six months were defined by a grim economy that clouded our businesses throughout the world. It forced us to look inward, provide improvements opportunities. In the second half we set our sights forward focusing externally to drive profitability through sales growth.

"Now it's time to reap the benefits of these two chapters, accelerating returns from the leaner more productive and revitalised infrastructure," he said.