Ingram Micro has said it may have to undertake further restructuring at its UK operation, despite reporting $8.8m profit for its second quarter of 2002, compared to a loss of $12m in the same period last year.
Sales fell $770m to $5.35bn during the year but a higher gross margin and reduced operating expenses contributed to the distributor's profitability.
The company warned that there could still be changes in Europe to drive efficiency.
"Europe entered the slowdown about two quarters after the US and we probably have a few more changes to make in weak performing countries, which are the UK and Denmark," said Karen Griffiths, senior vice president and chief financial officer at Ingram Micro Europe.
Griffiths said the company had worked hard to increase margins in the light of reduced demand. "The control of inventory and vendor relationships were the two main drivers for this," she said.
She added that the company recognised its value-add business as becoming increasingly important in the current climate. The slowdown had forced the company to batten down the hatches and look at its vendor and reseller partners to ensure which ones were appropriate.
"We are all in the same position and some of our partnerships have become stronger because we realise it's better to work together," Griffiths said.
Gordon Davies, commercial director at reseller Compusys, said he was not surprised by this. "The real shakeout has not yet begun. I think it will be another 12 months before we can see what the market's landscape will be."
Simon Minett, managing director at value-add distributor Comstor, said that broadline distributors could only reduce their costs by a limited amount, and that some are attempting to add value.
"Ingram Micro bought Sphinx's Cisco unit but it has not worked that well in the UK, and this could be one area where they could cut costs," he said.
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