Tech Data Profits Up as Currencies Change

By Nathan Eddy  |  Print this article Print

The strengthening of certain foreign currencies against the U.S. dollar positively impacted year-over-year net sales.

Showing strength under challenging conditions amid fears of a worldwide economic slowdown, IT products distributor Tech Data saw its third quarter sales rise to nearly $6.6 billion, a 7 percent increase from the same period last year. Operating income for the third quarter was $89.6 million. The company noted the strengthening of certain foreign currencies against the U.S. dollar, compared to the same period of the prior year, positively impacted the year-over-year net sales comparison by approximately 3 percentage points.

Net sales in Europe totaled $3.81 billion, or 58 percent of worldwide net sales, representing an increase of 10 percent over the prior-year third quarter, while net sales in the Americas—which represent 42 percent of worldwide net sale-- rose just 3 percent. Net sales for the nine-month period ended Oct. 31 were $19.38 billion, an increase of 12 percent from $17.26 billion for the nine-month period ended Oct. 31, 2010.

"Demonstrating the resiliency of our business model, our teams in both regions successfully navigated a moderating demand environment - selecting pockets of opportunity and delivering year-over-year sales and earnings growth," said Tech Data CEO Robert Dutkowsky.

He also noted the completion of another $100 million in share repurchases during the quarter contributed to the company’s 12th consecutive quarter of double-digit earnings per share growth and brought their cumulative share repurchases to $900 million since 2005. In addition, for the last 12 months, the company generated a return on invested capital of 15 percent, which Dutkowsky said underscored a strong reinforcement of their commitment to shareholder value creation.

"For the fourth quarter, we are planning, in both regions, for flat to low single-digit sales growth in local currencies. We will continue our focus on responsible growth and on the quality of the revenue opportunities we pursue, taking into consideration our gross and operating margin goals," Dutkowsky said. "In Europe, we are currently realigning our resources to more closely match our cost structure and our skills portfolio with market opportunities, which will result in incremental costs of approximately $15 million in the fourth quarter. Despite this, we still expect a solid fourth quarter and another record-setting year for Tech Data."