Avnet’s Q3 sales essentially flat

End market growth continues to be mixed as Top 50 distributor takes steps to cut costs, improve margins

Technology solutions distributor Avnet, Inc. announced its fiscal third quarter earnings today, reporting essentially flat sales for the period ended March 30, 2013.

Avnet’s revenue for the quarter was $6.3 billion, and adjusted diluted earnings per share (EPS) of $0.90 declined 12.6% year-over-year. The results were in line with expectations, company leaders said.

Growth in Avnet’s end markets continues to be mixed as the economic recovery continues its uneven pattern.  In addition to the EPS decline, Avnet’s adjusted operating income margin declined 65 basis points year-over-year. As a result, company leaders announced new annualized cost reductions of $40 million to help drive margin improvement. The reductions are expected to be completed by the end of the fourth quarter, company CEO Rick Hamada said.

In its Electronics Marketing group, Avnet reported revenue of $3.8 billion for the quarter, an increase of 1.1%. The group’s book-to-bill ratio closed slightly above parity in all three regions, but the supply chain continues to be characterized by relatively short and stable lead times, encouraging customers to take a conservative approach to managing inventory, an Avnet spokesperson said, adding that inventory turns improved sequentially for the business.

Following a stronger-than-expected second quarter, Avnet’s Technology Solutions group experienced a normal sequential seasonal revenue decline, reporting a 0.9% year-over-year decline to $2.5 billion. Sales of storage, services, and networking and security products grew year-over-year, but were offset by declines in servers and computing components, the company said.

Avnet ranked number 1 in SourceESB/Global Purchasing’s 2012 Top 50 Distributors report.

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