Avnet Posts Solid First-Quarter Results

Avnet Posts Solid First-Quarter Results

Revenues rise 2%, profitability improves, and the distributor points to better business conditions in Europe during its first quarter of fiscal year 2016.

Avnet’s Gerry Fay points to Europe, IoT as key business drivers in fiscal first quarter.

posted solid fiscal first-quarter sales and earnings in October, with revenues up 2% to $6.97 billion compared to the same period last year. Adjusted net earnings rose 10% for the quarter, to $1.12 per share, and company CEO Rick Hamada pointed to expanded operating margin across the company’s two business units, Avnet Electronics Marketing and Avnet Technology Solutions.

"Our team delivered a strong Q1 performance starting with revenues at the high end of our expectations for both operating groups, led by growth in our EMEA region,” Hamada said in a statement announcing the results. “… While we continue to navigate a global marketplace with mixed economic signals and a stronger dollar, we will continue to focus on expanding margins and returns while maintaining our disciplined approach to capital allocation."

In a follow-up interview to the earnings report, Avnet’s Gerry Fay emphasized the distributor’s strong performance as well, pointing to growth in Europe and the potential of the Internet of Things as market drivers.

”All in all, we continue to perform well in a challenging environment,” said Fay, who is global president of Avnet Electronics Marketing, the company’s electronic components business unit. “We continue to be focused on improving gross margins and being the number one choice of our customers and suppliers.”

First-quarter revenue rose 2% at Avnet EM, with the largest increase coming from the Americas region (4%); followed by Europe, the Middle East, and Africa (EMEA) (2%); and Asia (1%). Excluding the impact of changes in foreign currency exchange rates, EMEA saw the most growth, increasing 21% compared to the year-ago quarter at Avnet EM.

“[Europe’s] economic stimulus came later than [it did for] us in the Americas, so their overall market is performing quite well,” said Fay, pointing to industrial and automotive markets as particularly strong across the region.

The Internet of Things is also making a difference for Avnet, whose offerings span the range of what’s required to connect products, equipment, and systems to the Internet. Fay points to the company’s ability to provide electronic components, embedded systems, information technology and cloud-based computing solutions, and design and supply chain services as a way the company can create higher vale—both for Avnet and for its customers.

“That, for us, is why IoT and embedded is so important. It should provide us growth and market opportunities—and allow our customers to get to market faster,” he said, pointing to collaborative programs such as Avnet’s recent launch of an IoT starter kit in partnership with Broadcom that includes cloud connectivity support to Amazon Web Services. The kit allows designers to prototype and develop cloud-connected devices quickly and then move to production with a pre-certified wireless system-on-chip (SoC) module.

Fay said Avnet saw strength in IoT and alternative energy business in the first quarter, noting the long-term potential of industrial IoT business in particular.

Looking to the second quarter, Avnet said it expects sales to be in the range of $6.9 billion to $7.5 billion and expects diluted earnings per share in the range of $1.20 to $1.30. 

TAGS: IoT
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