Updated:Nu Horizons Back In Profit

Nu Horizons has bounced back into profit in the first quarter.

In the period from March to May the semiconductor distributor posted a profit of $3.4m against a loss of $944,000 in the same period last year. Revenue increased a healthy 43 per cent to $210.8m from $147.8m last year.

The company has benefited from the upturn in the semiconductor market which has seen electronics OEMs replenishing and adding to its component inventories.

The news is a positive for Nu Horizons which announced earlier this year that its franchise agreement with Xilinx was being terminated.  The deal officially ended on June 5. In the interim Nu Horizons has signed another FPGA supplier, Lattice Semiconductor and a raft of other new lines.

In his first financial outing as Nu Horizons chief executive office Martin Kent (pictured left) was clear about the future.

"In order to remain profitable without Xilinx, the company will have to continue to increase sales in future quarters," he commented.

Updated: More from Martin Kent on prospects for the future. "Industry demand momentum continued through the first quarter of our fiscal year 2011. We are pleased to report a fifth consecutive quarter of sequential revenue growth. Revenues increased in all of our geographic segments, with successful diversification reflected in Asia increasing to over one-third of total sales. As compared with the year-ago period, revenue increased by nearly 43% to a fiscal first quarter record level of over $210 million, which includes three months of sales associated with Xilinx products that will no longer be distributed. Excluding Xilinx sales, the first quarter revenue increased 52.7% compared to the comparable prior year period. A further sign of encouragement is that our book-to-bill ratio without Xilinx was 1.22:1 for the first quarter. However, in order to remain profitable without Xilinx, the Company will have to continue to increase sales in future quarters."

"As we strengthened our revenue profile, we maintained our focus on enhancing profitability. The gross profit margin on consolidated sales in the first quarter improved sequentially, and is expected to improve further as our demand creation revenues increase from our expanding base of vendors and new product lines. Furthermore, our gross profit margin on non-Xilinx revenue is almost a full point higher than the gross profit margin on total sales including Xilinx. We intend to continue to take steps to increase our top line growth and increase our gross profit margin in future quarters."

Kurt Freudenberg, Executive Vice President and Chief Financial Officer, added, "We successfully concluded our Xilinx distribution agreement termination on June 5, 2010. All Xilinx inventories have been sold to our customers or returned to Xilinx for cash. During the first quarter we continued to make improvements to our balance sheet. Our improved cash position at the end of the fiscal first quarter along with a new global credit facility executed in June with maximum borrowings of up to $80 million, is expected to provide us with financial flexibility to capitalise on the growth and market share expansion opportunities available to us globally."