The depreciating Euro is not doing US-based distributors with European operations any favours at all. Unveiling an excellent set of Q2 2015 results from Arrow Electronics, the company’s CEO Mike Long revealed that the Euro’s decline against the dollar had a negative impact of $350m on sales compared to Q2 2014.
Global components sales were in the vanguard of Arrow’s advance delivering Q2 sales of $3.7bn, an increase of four per cent year on year. Adjusted sales show Europe storming in at 11 per cent growth. Asia/Pacific and the Americas supplied a more stately four per cent and three per cent respectively against Q2 2014.
In a conference call to analysts, Mike Long commented. “As you know, we’ve been investing in sales for quite some time, sales and engineering. We started a year ago investing and increasing our sales force and our engineering force in China. We followed up, and we did that in Europe and also in North America. And so what we’ve seen is really this quarter a record of design wins that are coming in, which are as you know, pretty much future promises for designs, which gives us comfort in the outlook and also in increasing customer base as a result of that.”
Long also cited business growth in the aerospace and defence markets in Europe.
Arrow’s second-quarter 2015 net income of $123.9m compared with net income of $127.9m in Q2 2014.Excluding certain items in the second quarters of 2015 and 2014, net income would have been $148.9 million, or $1.54 per share on a diluted basis, in the second quarter of 2015, compared with net income of $144.3 million, or $1.43 per share on a diluted basis, in the second quarter of 2014. Second-quarter sales of $5.83bn increased three percent from sales of $5.68bn in the prior year. Second-quarter sales, adjusted for the impact of acquisitions and changes in foreign currencies, also increased 3 percent year over year.
“Second-quarter sales exceeded the midpoint of our expectations. Excluding the impacts from changes in foreign currencies, EPS advanced nearly 16 percent year over year, with both our global components and enterprise computing solutions segments delivering sales growth and expanded operating margins. Both businesses continued to experience strong demand in Europe. Our focus on selling comprehensive solutions resulted in record second-quarter operating income and operating margin for our enterprise computing solutions business,” said Long.
Global enterprise computing solutions second-quarter sales of $2.13bn grew two percent year over year, adjusted for acquisitions and changes in foreign currencies.
Arrow’s net income for the first six months of 2015 was $230m compared with net income of $235m in the first six months of 2014. In the first six months of 2015, sales of $10.83bn increased one percent from sales of $10.76bn in the first six months of 2014. Six-month sales, adjusted for acquisitions and changes in foreign currencies, increased three percent year over year.
“As we look to the third quarter, we believe that total sales will be between $5.55bn and $5.95bn, with global components sales between $3.65bn and $3.85bn, and global enterprise computing solutions sales between $1.9bn and $2.1bn. Based on this assumption, the weaker Euro will have a negative impact of $280 million or 5 percent on sales and $.08 or 6 percent on earnings per share on a diluted basis, respectively, when compared with the third quarter of 2014, and a negative impact of $40 million or 1 percent on sales and $.01 or 1 percent on earnings per share on a diluted basis, respectively, when compared with the second quarter of 2015,” said CFO Paul Reilly.
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