Ingram Micro Europe looks to big three as sales fall

With its global sales just below last year's record first quarter despite the slightly negative impact of weaker foreign currencies, Ingram Micro managed to lift profitability. This was down to hard disk drive pricing, and a "strong contribution from our higher-margin specialty businesses".

Data Capture/Point-Of-Sale business had a strong quarter, posting double-digit sales growth, with gross margins meaningfully above the overall company average. "Demand for these products is strong throughout the world as businesses look to Enterprise Mobility solutions to boost productivity and customer service, which we expect will help continue to drive strong growth rates, CEO Alain Monie (below) told analysts.

In Europe, the depressed economic conditions in the region continued to impact revenues, which were down as expected versus last year, it says. While Germany and the UK are relative outperformers, the economic malaise facing the continent continues to be felt most in the southern countries and the Benelux region.

European sales were down 8% to $2.6bn. The translation of regional currencies had a negative effect of approximately 4 percentage points. Performance varied by country, with pockets of relative strength in SMB, retail and corporate markets. "Our focused efforts on the SMB market and the UK continued to be rewarded, as SMB sales in the country grew for the 8th consecutive quarter. We're expanding our targeted SMB efforts into other countries that have slower markets through specific and targeted programs," he says.

"We're continuing to invest in higher-growth and higher-margin specialty markets in Europe. The importance of these initiatives and the contribution they can make to company-wide profitability is well illustrated by the performance of our other organic investment and M&A initiatives in Europe such as DC/POS, which has experienced strong sales growth with gross operating margins significantly above the market average."

"We're trying to really leverage the three big engines we have, which are Germany, the UK and France. Germany and the UK, we feel pretty good about how they're performing given the environment. France, we had a weaker-than-usual quarter, but that's due to a couple of events there. One of our customer's going into receivership and then one of our large retailer's being taken direct, but we don't think that's going to have an impact on our operation in France. And the rest of southern Europe is really, as you know, not very strong right now."

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