Avnet’s Q4 performance exceeds expectations

Aug. 12, 2013
Boosted by its electronic components business, Q4 revenues rise nearly 5%; company also announces quarterly dividend

Technology solutions and electronic components distributor Avnet Inc. reported better-than-expected quarterly earnings last week, with its components business helping to boost overall performance.

Avnet announced the results August 7, reporting fourth-quarter revenue of $6.59 billion, a 4.5% increase year-over-year. Earnings per share fell 1% year-over-year to 98 cents a share.

By segment, Avnet Electronics Marketing (EM) experienced better-than-expected sales and Avnet Technology Solutions’ (TS) growth was in-line with normal seasonality, the company said.

Avnet EM’s reported revenue of $3.97 billion increased by 5.5% year-over-year. After adjusting for acquisitions and currency, sequential revenue growth of 4.7% was at the high end of normal seasonality for Avnet EM. Sequential growth was led by the Americas region, which grew 5.5%, while the Asia and EMEA regions increased 4.3% and 3.3%, respectively, the company said. Year-over-year organic revenue growth turned positive for the first time in eight quarters and Avnet Electronics Marketing’s book-to-bill ratio remained above one in all three regions for the third straight quarter.

At Avnet TS, revenues grew 3% from the year-ago quarter to $2.62 billion. Segmental revenues were within management’s guidance range of $2.45 billion to $2.75 billion. The year-over-year growth was mainly due to an 18.3% increase in Europe, Middle East & Africa (EMEA), partially offset by a decline in Asia and Americas, the company said.

For fiscal year 2013, Avnet’s sales fell 1% to $25.5 billion compared to the prior year and adjusted operating income of $775 million fell 19%.

“Our fiscal 2013 results reflect the impact of slower global economic growth and businesses’ cautious spending on technology, particularly in our higher margin western regions,” said Avnet CEO Rick Hamada.

Looking ahead to its fiscal first quarter, Avnet said EM sales are expected to be in the range of $3.7 billion to $4 billion and TS sales are expected to be between $2.35 billion and $2.65 billion.

Avnet followed up the earnings news with an announcement this week that its board of directors approved the initiation of a quarterly cash dividend. An initial quarterly cash dividend of 15 cents per common share will be paid on September 20, 2013 to shareholders of record as of the close of business on September 10, 2013.

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