Broadline electronics distributors sell everything from IP&E products to semiconductors and systems, so their quarterly results provide a snapshot into the overall health in the global market. As Arrow Electronics Inc. and Avnet Inc. report their results for the June quarter, it’s clear the environment remains challenging.
Both distributors saw sales increase for the quarter: Arrow’s sales for the period increased by 3 percent; Avnet’s by 4.5 percent. But both companies had trouble making money on those sales as net income remained flat or declined slightly. Executives reported that demand for components is picking up, but clearly, prices aren’t following suit. “In our components segment, we saw each of our regions post sales above the high end of normal sequential seasonality,” said Michael J. Long, chairman, president, and chief executive officer of Arrow. “EM revenue came in above expectations this quarter with all three regions contributing to the solid topline performance,” said Rick Hamada, Avnet CEO.
Looking ahead to the third quarter of 2013, there remains economic uncertainty across the globe, according to Arrow. In light of these economic conditions, the company remains somewhat cautious in the outlook for business activity in the third quarter. Arrow expects its sales to be at the low to midpoint of normal sequential seasonal activity. Both companies are looking internally to improve their results. “While there continues to be questions around global macro conditions going forward, we enter fiscal 2014 with a strong focus on our profitable growth initiatives and remain committed to delivering improved financial performance across our portfolio,” said Avnet’s Hamada.
Based on distributors’ forecasts, buyers are likely to see ample supply of component going forward and stable prices. While volume shipments appear to be increasing, suppliers’ and distributors’ inability to raise prices will continue to impact their bottom line.