Europe and IP&E sales drove Avnet revenues 12% higher in the second quarter of its 2019 financial results. Sales rose to $5.05bn in Q2 against $4.50bn in the corresponding quarter last year. Profits fell to $36.4m compared to $46.7m last year.
“Our second quarter results demonstrate the tremendous progress we are making in transforming Avnet into a global technology solutions company,” said Avnet CEO Bill Amelio (pictured). “Even with the current uncertainties in Asia, Avnet posted strong gains in revenue and profitability compared to a year ago. Our unique ecosystem approach is really starting to pay off with our suppliers and customers. With the addition of Softweb Solutions, we now have the software and hardware to deliver an end-to-end IoT capability that can lower costs, speed time to market, and reduce complexity for our customers.”
Amelio identified a slowdown in Asia and he is uncertain when it will correct itself.
“Europe and the Americas are steady on several areas of strength,” he added.
“Defence and aerospace is very healthy and Avnet’s position in that vertical is improving,” he continued. “Industrial demand remains strong and even transportation is doing well. Transportation is an area where unit demand has moderated, but content opportunities continue to increase, which is a growth driver for us.”
“In our Americas region, execution has improved dramatically in recent quarters. Revenues in Q2 were up nearly 8% from a year ago and our forward indicators show a healthy and stable pipeline,” said Amelio. “This past quarter the Americas region achieved its second consecutive quarter of design win dollar growth, which is an area now showing good growth and momentum. Our customer satisfaction in the Americas has improved significantly as evidenced by an increase in our Net Promoter Scores.”
“And importantly supplier confidence has been restored, which is opening up new doors for growth and collaboration.”
“Europe remains steady with outstanding performance,” Amelio commented. “Our Europe team delivered year-over-year double-digit revenue growth constant currency and continues to be our most profitable region.”
He also lauded the company’s interconnect, passive and electromechanical business which enjoyed a very strong quarter.
“Revenues grew over 16% from a year ago, with margin higher than our corporate average. On the supplier front, I’m pleased to note that Avnet added two new global supply franchises to our line card this quarter and also extended four regional supply franchises as well. These additions and expansions are indications of the unique value supplier see in our ecosystem and their confidence in Avnet as a driver of growth,” remarked Amelio.
On a call to analysts hosted by seekingalplha.com, Phil Gallagher, Avnet’s Global President for Electronic Components gave more detail on the company’s European business.
“The Q2 book-to-bill in Europe was just around one to one, just over 1.1 to 1.01 to 1. So we still see it positive in Europe across the board.”
“Now is it where it was book-to-bill ratios from a year ago 1.25?” he continued. “No. So we’re definitely seeing a bit of a correction in Europe. However, with that in mind we’re still seeing consistent performance from our team in Europe.”
He added that Germany is still strong for Avnet with what he described “as nice growth out of the transportation market.”