Avnet's Q2 update showed that revenue of $6.85 billion was near the low end of expectations, due to weaker demand in industrial markets and EM Americas and a softer-than-expected close at TS Americas.
As a result, revenue increased 6.4% sequentially after adjusting for the impact of foreign currency changes and the extra week in our September quarter as compared with the normal seasonal range of plus-10% to plus-14% growth, it says.
The EMEA region continued multi-quarter positive growth trend, as revenue increased 3.5% year-over-year in constant currency, led by continued strength in the electronics marketing business. Despite this EMEA performance, global organic revenue declined 5.5% year-over-year in constant currency, as the Americas region decreased 9.9% and the Asia region declined 9.5% in constant currency.
Gross profit margin increased 27 basis points from the year-ago quarter to 11.4% driven by improvements at TS across all three regions. In TS EMEA, a fourth consecutive quarter of year-over-year organic growth in core business in constant currency was offset by a decline in computing components as organic revenue declined 10.6% in reported dollars and 2% in constant currency.
Patrick Laurent Zammit - President - Technology Solutions: "We were a little bit surprised by, I would say, some softness in closing deals on storage. And to be very specific, it's legacy technology storage.
"In fact, if you look at the next-generation technologies like converged, hyper-converged or flash arrays, we grew very nicely, double digits, in some cases even high-double digits. So, here, we see traction. But unfortunately, the positives are not enough to offset the decline on the legacy storage technology."
In EMEA market conditions for the moment remain positive, he says. "I will just add that companies had delayed investments because of the sluggish market environment. They have a better visibility now, so they have to invest and they're investing.
"So, that's helping the market. In addition in that market, we continue to execute very well. I mean, we've made some management changes. And so, all the regions are now in - within Europe, all the regions are recovering nicely.
"We have some record results in some of the regions like Eastern Europe and Northern Europe. Central Europe continues to develop very well. And Southern Europe, which was an issue for us, is now turning around."