Tech Data's global Q4 sales increased 2% year-over-year on a reported basis to $7.5bn. On a constant currency basis and excluding from Q4 of the prior year approximately $78m in sales generated by operations in Chile, Peru and Uruguay that it sold last year, worldwide sales increased 11%. Both regions executed well in the quarter, it says, outperforming the market and delivering sales well above the high end of guidance. The latest figures show that 64% of its total sales are in Europe -$4.8bn in Q4 which is flat in dollar terms, but +11% in constant currency.
The majority of European countries posted strong sales growth in local currencies. Numerous countries in trade regions grew by double digits, most notably Germany, UK, Iberia, Italy and Switzerland. Networking was up in both US and Europe, as was security, while servers and storage both fell.
It saw double-digit local currency growth in mobility, consumer electronics, software, and broadline products, in particular notebooks. Worldwide gross profit for Q4 was $354.6 million, down approximately 5% year-over-year, primarily due to foreign currency headwinds and lower gross margins, partially offset by higher sales volumes. On a constant currency basis, gross profit increased approximately 3% year-over-year.
CEO Bob Dutkowsky says: “Our primary focus is on growing gross profit and operating income dollars. During any given quarter, we'll have the opportunities to take lower gross margin business that required lower levels of SG&A and capital. Software is one example of a lower margin, low capital-intensive category that delivers a strong return on invested capital. On the other hand, some vendors, with lower gross margin profiles, fund our SG&A for selling their products, thus delivering good operating income dollars and a solid bottom line performance.”
On the acquisition of big rival Ingram Micro by a Chinese company, he takes a pragmatic view: “We competed with Ingram when they were a private company. We competed with them when they were a public company. And now, we'll compete with them when they're a Chinese-owned company. It doesn't change.”