Avnet Ahead of Forecasts in First Quarter

Avnet has perked up the distribution sector by posting first quarter results which topped expectations.

Roy Vallee (pictured), chief executive officer of Avnet also indicated that the second quarter would also be ahead of previous forecasts.

In the first quarter sales fell by three per cent to $4.36bn. Profit was $50.9m down from $90.3m in the same quarter last year.

"While the impact of the global economic downturn remained evident  in our year over year revenue decline, our better than expected sequential growth rates provided additional confidence that the business environment is improving," said Vallee.

At Electronics Marketing (EM), which encompasses Avnet's components distribution business, sales of $2.44 billion for the first quarter were down 9.8 per cent year over year on a reported basis and down 8.0% when adjusted to exclude the impact of changes in foreign currency exchange rates.  EM sales in the Americasand EMEA regions decreased 20.5% and 10.6%, respectively, year over year on a reported basis with EMEA's revenue down 4.4% excluding the impact of changes in foreign currency exchange rates. EM sales in Asia increased 3.0% year over year on a reported basis.  EM's operating income was $81.4 million and operating income margin was 3.34% for the first quarter fiscal 2010 as compared with operating income of $138.7 million and operating income margin of 5.13% in the prior year first quarter.

Vallee added, "EM's sequential sales growth for the September quarter was better than normal seasonality and its year-over-year revenue decline moderated. EM Asia grew sales roughly 15% sequentially after adjusting for the extra week and improved ROWC both sequentially and year over year. In the more mature markets, EM Americas and EM EMEA delivered a sequential improvement in operating income margin, asset velocity and return on working capital. While revenue is still below year ago levels, we are encouraged by EM's strong book to bill ratio for the quarter and the pace of bookings thus far in October."