Avnet boosted profits to $114.3m in the third quarter of its financial year, up from $107.1 last year. The distributor also reported an 8.8% increase in revenues to $4.44bn
“Our organic revenue grew 3.4% sequentially in constant currency and adjusted operating income increased 4.8%. Our investments in e-commerce continue to yield results as digital sales exceeded a $700 million annual run rate driven by better than expected revenue at Premier Farnell where operating income margin exceeded 10%,” said Bill Amelio, CEO of Avnet. “Our EMEA team delivered another strong quarter as organic revenue grew 16% sequentially in constant currency and operating income margin increased 21 basis points. Despite near-term challenges in our upcoming quarters related to supplier losses and changes to supplier programs, we are confident our investments in digital tools and our transformation initiatives that are focused on streamlining our operations and improving our ability to serve our customers and suppliers. This will position Avnet for future profitable growth in a rapidly changing technology supply chain environment.”
Avnet will also invest in a global ERP system that incorporates key elements of its international ERP systems that have been successfully supporting the business for many years.
In addition to supporting its emerging digital business model, the global ERP system is expected to enhance the customer experience, lower operational cost and improve global analytics.
While this system may take up to 24 months to complete, Avnet will continue to invest necessary resources to modify and maintain the Evolve system in the Americas to continue to deliver support to customers and suppliers.
As a result of this decision, Avnet expects to recognise accelerated depreciation on the Evolve system, which will negatively impact results by approximately $18 million per quarter over the next eight quarters.
Avnet expects fourth quarter sales to be in the range of $4.35bn to $4.65bn.
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