Ingram's SAP woes hit bottom line

Despite solid first quarter sales, NYSE-listed Ingram Micro’s quarterly income has declined, following a bumpy transition to a new backend enterprise system in Australia.

The quarter, which ended April 2, saw net income decline to $US56.3 million ($51.60 million) from US$70.3 million in the previous corresponding period, the distributor reported overnight.

"During the quarter, we drove solid revenue growth across all regions and continued to advance initiatives that further expand and improve our global business," said, Gregory Spierkel, chief executive officer at Ingram Micro.

"North America was the standout region, generating its highest first-quarter sales in a decade with strong operating leverage. Asia-Pacific sales also hit a first-quarter high, while sales in Latin America returned to pre-recession levels.

“Operating and net income, however, did not meet our expectations largely due to complications with our ERP system implementation in Australia. We're diligently addressing these issues to drive improved profitability and performance as soon as possible.

“We are confident the future benefits of the new system outweigh some of the hurdles we are facing today,” he said.

In January Ingram Micro switched its internal ERP system to SAP from 10-year-old legacy Adonis system. Shortly after the deployment, several readers contacted CRN about ongoing difficulties with the ordering process and invoicing.  

Last quarter's worldwide sales, however, were $US8.72 billion -- a first-quarter record and an eight percent increase from $US8.10 billion reported in the first quarter of last year.

Overall, Asia-Pacific sales rose nine percent to $US1.93 billion (22 percent of total sales) compared with $US1.77 billion reported the year prior.

"In the second quarter," said Spierkel, "we expect sales to grow on a year-over year basis, building on the healthy revenues of last year.

“While we continue to see progress in Australia, the remaining transition issues will likely have an impact on the quarter.

"The competitive environment in Asia-Pacific and the softer retail demand in Europe may also continue to have an effect on gross margins," he said.