Avnet Australia triples profit in "best year" since 2011

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Avnet Australia triples profit in "best year" since 2011
Darren Adams

The local arm of global distributor Avnet Technology Solution tripled its profit for the 12 months to 28 June 2014 in a largely upbeat year only marred by a round of job cuts in May.

In its most recent report to ASIC, Avnet posted $2.99 million of net profit for the 2014 fiscal year, compared with last year's figure of just $982,000. Sales were up almost $37 million, hitting $445.3 million.

Avnet's ANZ general manager, Darren Adams, would not expand on the numbers but did agree that revenue was up and that "operating profit outgrew sales".

"It was really the best year we've had since the acquisition of itX [in 2011]," said Adams, who was appointed ANZ head at the start of 2013.

"The success was from a year of consolidating warehouses, securing new suppliers, and value-adding for existing suppliers – especially services like integration, staging, asset tagging. [They're] services that our partners have been craving."

In terms of technology, Adams singled out some areas: "We had a nice lift in software, networking and security. And storage was relatively strong."

[Related: Avnet holds onto x86 in post-IBM era]

Adams touched on the staffing restructure earlier this year. "We did do some restructuring, around about May. In some cases, unfortunately, some people left our business… but we also added head count costs into some parts of the business.

"We needed to ask 'Where do we need the right resources going forward?'"

He added that Avnet had "hired back" for some positions in the past two or three months.

Focus on support

Adams said that Avnet has made a "very conscious decision" to have support staff located within Australia.

"In Australia, for every two salespeople we have one technical person on our payroll," Adams told CRN. "This is a very high ratio, for a distributor.

"This is so that we can drive activities like configuration, converged solutions, new technologies, and assist with proof of concepts. When you need help to get a build up [and running] you really need people in Australia, not somewhere else."

Looking at the year ahead, he predicted two emerging hardware technologies as growth areas.

"Solid state storage is a real growth area. There's quite a bit of momentum, although it's off a low base," said Adams. "The other one is converged solutions. Australia hasn't quite got the bug yet, but I've seen signs that it's changed in the last couple of quarters."

Adams said there was currently "a lot of transition in the market" but with Avnet Australia back in a stable position, the distie will be in ready to assist its partners.

"Now that we have our shop in order in Australia, we're returning to growth. We'd like to help our partners' transition to the cloud."

The improvement in Australia countered a decline in fortunes for Avnet's Asia-Pacific operations. The region suffered a 15.2 percent drop in sales, according to a quarterly earnings call held last week by the US head office.

Globally, Avnet has 18,000 staff and generated $27.5 billion of revenue for the year ending 28 June. The distie's global president, Phil Gallagher, stepped down in September after 31 years with the company.

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