Avnet cheers rising EMEA profit margins

Global VAD posts sixth straight quarter of earnings-per-share growth - although sales down at Technology Solutions arm

Avnet chief executive Rick Hamada hailed its improving profitability in EMEA as the distributor unveiled a "steady" set of Q2 numbers.

For the three months ending 27 December, the enterprise IT and components distributor saw sales clamber 1.8 per cent to $7.6bn (£5bn) on an annual comparison, despite fierce currency headwinds.

Net income exceeded expectations by rising 7.4 per cent to $176m.

"Our team delivered steady progress in our financial performance as revenue and earnings exceeded expectations and earnings-per-share grew year over year for a sixth consecutive quarter," Hamada (pictured) said.

Avnet's components arm, Avnet Electronics Marketing (EM), was yet again the blue-eyed boy as sales glided up 6.8 per cent to $4.44bn and operating profits jumped 11.5 per cent to $191.4m.

The picture for its enterprise IT arm, Technology Solutions (TS), was more mixed as revenues fell 4.6 per cent to $3.12bn and operating income fell 2.2 per cent to $117.6m.

TS' EMEA sales fell 8.5 per cent to $856.8m, a three per cent drop in local currencies, although Hamada revealed profit margins on this side of the pond are rising at both TS and EM.

"Adjusted operating income [for Avnet as a whole] increased 4.3 per cent year over year primarily led by the EMEA region, where both operating groups improved gross profit margins and realised contributions from expense management," Hamada said.

Looking ahead, Avnet said it expects EM sales to hit between $4.15bn and $4.45bn in Q3, with TS sales set to fall between $2.45bn and $2.75bn.