Avnet Tops Sales, Profit Targets

Avnet has topped sales and profit expectations in its second quarter. Revenues moved forward 1.8% to $7.6bn and net income was up 7.4% to $176m.
Avnet EM, the component distribution business revenues reported an impressive year on year 6.8% revenue hike to $4.43bn. Asia/Pacific provided the rocket fuel growing revenues 17.1% to $2.02bn, EMEA revenues, excluding currency exchange rates delivered a 7.1% increase to $1.21bn. Sales in the Americas were flat at $1.2bn.
“Similar to our September quarter, better than expected growth in our select high volume supply chain engagements in Asia drove revenue to the high end of expectations and above normal seasonality. EM Asia grew 17.1% year over year and became the first region at Avnet to exceed $2 billion in quarterly revenue. This strong growth, along with another quarter of high single digit growth in EMEA, drove EM’s revenue up 9.7% year over year in constant currency. With our book to bill ratio at parity, and seasonal growth expected in our higher margin western regions, we feel confident that EM can build on our multi-quarter trend of expanding margins and returns,” commented Rick Hamada, Chief Executive Officer of Avnet.
Reviewing the quarter, Hamada, Chief Executive Officer, added, “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. Despite some currency headwinds beyond our expectations, reported revenue grew 1.8% (4.6% in constant currency) led by a seventh consecutive quarter of year-over-year organic growth at Electronics Marketing (EM). At Technology Solutions, revenue grew an above seasonal 29% sequentially in constant currency driven by the EMEA and Americas regions. Adjusted operating income increased 4.3% year over year primarily led by the EMEA region, where both operating groups improved gross profit margins and realized contributions from expense management. The sequential increase in revenue and profitability, combined with a 2.8% sequential decline in working capital, drove our return on working capital up over 400 basis points and cash flow from operations over $260 million for the quarter. Although we continue to experience an environment of mixed signals regarding overall growth expectations, our team will continue to focus on key levers of profitable growth and build upon this performance.”