Avnet Profits Up 425%
By Rob Spiegel -- Electronic News, 4/30/2004
The distribution industry is showing strong signs of life again, and nowhere is this more evident than at No. 1 electronics distributor Avnet.
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The company reported sales of $2.64 billion for its fiscal Q3 ended April 3, up 13 percent from Q3 2003 and up 3 percent sequentially. Net income for the quarter was $26.7 million or 22 cents per share as compared with $1.5 million or 1 cent per share in Q3 2003.
Both quarters included charges associated with early extinguishment of debt. Excluding such charges, net income increased to $40.9 million or 34 cents per share in Q3 2004, representing an improvement of 26 cents per share over last year’s 8 cents per share.
Increased sales straddled all geographies as the Americas and Europe/Middle East/Africa (EMEA) started to catch up with booming Asia.
“The increase in EM [Avnet’s Electronics Marketing unit] sales across all geographies demonstrates that Avnet is enjoying a significant uplift from the technology industry recovery,” said Roy Vallee, Avnet’s chairman and CEO. “In addition to continued robust year-over-year growth in Asia, we are encouraged by the double-digit growth on both a sequential and year-over-year basis in EMEA and the Americas.”
EM represents 60 percent of Avnet sales. The EMEA and Americas regions total 84 percent of revenue.
EM President Andy Bryant told Electronic News that he is hopeful the recovery will last at least two more years. “There’s typically four years of up market for every down year,” said Bryant. “We’re in year two, so there are two more to go.”
He noted that this recovery is particularly orderly. He attributed this to the severity of the downturn. “We’re seeing growth rates that are healthy,” said Bryant. “The downturn was so severe that everyone became very cautious, so the recovery has been very orderly.”.
Bryant attributed the quick growth in the Americas and EMEA to the recovery of the industrial sector, which he believes is tracking GDP’s upward movements. “The industrial growth is steady, dependable and tied to true economic growth, the GDP,” said Bryant. “Industrial companies are building sales, and they’re adding inventory to handle those sales.”
He explained that consumer growth hasn’t lost steam, and the recent industrial lift should give consumer growth even more oomph. “Consumer boosts come off industrial boosts,” said Bryant. “That’s more in North America and Europe. The lookout on consumer spending is tied to new and exciting products that people will pursue as wages and jobs improve.”
As for new products, Bryant said that both the Internet and PC are spawning wireless products. “The wireless market is a huge new lateral market spun out of the convergence of the PC and the Internet. It’s a big driver of what’s going on,” said Bryant.
Finally, Bryant noted that the overall electronics market is being driven in part by the introduction of silicon into more and more standard products. “The reason we’re seeing the growth we’re seeing now is because the semiconductor market is proliferating,” said Bryant. “We’re seeing silicon in all aspects of our lives, from autos to washing machines. That’s broad-based.” |
