Avnet to cut more costs as sales fall

Avnet will look to further cost cuts after reporting a drop in sales across its business as customers continue to delay IT projects.

Rick Hamada , Chief Executive Officer, commented that the distributors first quarter results represent a “disappointing setback” for its short-term performance expectations, as total sales across its Electronics and Technology Solutions divisions fell 8.7 percent to $5.8 billion.

According to Hamada the company suffered from greater than expected declines in many regions, particularly in EMEA, creating a “dramatic impact” on the financials.

“Our Q1 results represent a disappointing setback in our short-term performance expectations,” he said.

“Key segments of our served markets slowed during the quarter beyond our initial expectations, leading to a dramatic impact on our bottom line results as our revenues in the higher-margin western regions declined double-digit percentages year over year.”

Total Avnet TS revenues were down 15.1 percent to $2.2 billion, while EMEA revenues fell by 18.4 percent to $635.5 million during the quarter.  This shortfall was attributed to slower transactional activity, with a delay to IT projects by customers.

In response to the lowered sales Hamada said that further cost reductions would be put in place at the company, which has already lowered costs by $90 million.

“While we have completed expense reductions that will positively impact the December quarter, we are in the process of identifying additional expense actions that will drive year-over-year improvements in operating income margin beyond the December quarter,” Hamada said in a statement.