Avnet is off to a fast start in its new financial year. Q1 sales of $5.6 billion are up from $5.2 billion in the prior quarter and grew 17.5 % year over year.
Farnell also rocked up with record sales of $455 million up 33 % from last year.
Regionally, EMEA sales grew 18 % year on year and 0.6 % sequentially to $1.57 billion.
Asia/Pacific was the first quarter powerhouse. Revenues leapt 26.6 % to $2.6 billion year on year and 12.3 % sequentially. Revenues in the Americas rose 4.4 % year on year to $1.26 billion.
Avnet Chief Executive Officer Phil Gallagher commented, “Building upon our solid performance in fiscal 2021, we were pleased to start off fiscal 2022 with a strong first quarter. We delivered another consecutive quarter of record sales in both our Electronic Components and Farnell businesses and reached our respective short-term operating margin targets of 3% and 10%. We are continuing to strengthen Avnet’s position through driving execution and accelerating the growth of our higher margin Farnell business, while also working closely with our supplier partners to balance supply and demand across the supply chain.”
Gallagher hailed Avnet’s investment in digital and design tools and field application engineers.
“These continue to pay off as we had another strong quarter of design and engineering activity across all regions. Strong levels of design registrations and design wins in prior quarters have resulted in record sales in design win revenue, and gross profits for the first quarter. These design wins and registrations continue to be a key organic growth driver for Avnet benefiting our operating margins, while also driving new business for our supplier partners.”
Farnell also came in for praise from Gallagher.
He noted that strategic investments in SKUs and e-commerce benefitted performance at Farnell, hence the record revenues of $455 million and operating margins up 10.9% in the quarter.
“Our investments in Farnell continue to deliver meaningful returns. In the quarter for Farnell’s digital capabilities yielded notable performance with 53% of revenues and 69% of total transactions attributed to e-commerce sales. We’ve seen positive results from the Farnell platform over the last 18 months as the team has embraced digital transformation. And we’re really excited by the potential for even greater success as we move all Avnet businesses to the platform over the coming quarters,” said Gallagher.
Investment has seen Farnell add 18,800 SKUs in the past quarter.
Commented Gallagher, “This reflects continued progress on our plan to add an additional 250,000 skews through the fiscal year 2022. Our inventory investments at Farnell have been critical to our success. This quarter 15% of Farnell sales were derived from new SKUs added over the last two years.”
Gallagher batted away the decision by Maxim Integrated, recently acquired by Analog Devices, to discontinue its distribution relationship with Avnet.
He noted that Maxim products only accounted for about 3% of the company’s sales during fiscal year 2021. “A financial impact on our business won’t be immediate. Given current market dynamics, the strength of our existing line card and supplier partners and our track record of managing through the impact of industry consolidation. We believe we can replace the margin dollars,” he added.
Gallagher also lauded the dedication of the Avnet team.
“I cannot emphasise enough how truly lucky I am to lead a company with such hardworking and talented individuals across the globe. Our team has endured the challenges of a complex market, but I truly believe it has resulted in a stronger, more resilient organisation that is poised for long-term success.”
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