Despite better than anticipated results in its second quarter Arrow Electronics will look to cut more from its cost base in the second half of this year.
Paul Reilly, executive vice president and chief financial officer indicated the company was pleased with its second quarter performance it realised that the cost savings it has generated to date were not enough to offset the sales decline and margins pressure experienced during this downturn.
"Given the market realities we are faced with we have an additional $100m in annual cost reductions that are expected to be implemented in the second half of 2009, primarily in our European operations," said Reilly. "We believe these actions are necessary to properly position our company to move forward with our long-term objectives, and should result in business simplification and alignment with market opportunities."
The distributor's global component sales were down 23 per cent year on year.
Commented Michael Long (pictured), Arrow chief executive officer, "In global components our results exceeded the mid point of our expectations driven by strength in Asia as well as a solid finish to the month of June in our north American business. The European economies remain weak and we continue to see significant year over year declines in the pace of business activity."
Arrow sales, encompassing the components and computing businesses, were $3.39bn compared with $4.35bn in the corresponding quarter of last year. Profits came in at $21.1m against $96.2m in 2008.
Good news is cash flow where Arrow generated $300m in the second quarter and over $1bn in the past 12 months. "This enables us to capitalise on opportunities that present themselves," said Long
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