Ingram Micro Inc. is hitting its stride in Asia.
The Santa Ana-based distributor of technology products, computers and software is seeing healthy sales gains there, driven largely by demand from China, India and other emerging economies.
For the third quarter, Ingram’s sales in its Asia-Pacific region tallied nearly $2 billion, up 19% from a year earlier and outpacing any other region for revenue growth.
Ingram’s seeing a boost as U.S. companies continue to establish or grow operations in Asia and consumer demand there rises for PCs, phones and other devices.
“Asia-Pacific delivered the highest quarterly revenues in the region’s history,” Chief Executive Greg Spierkel said in a call with analysts last month. “The standouts were China and India, but sales in nearly every country grew.”
The company also saw an uptick in sales Down Under, according to Spierkel.
“Australia and New Zealand found particular strength in the commercial segments,” he said. “Australia also made progress in its services businesses, winning new accounts and developing greater presence.”
Ingram Micro’s customers are called value-added resellers. Most are technology consultants that sell goods and services to small and midsize businesses. Ingram Micro also sells to retailers.
Ingram is the biggest company of any type in Orange County by sales. It sees more than $30 billion in yearly revenue and had a recent market value of $2.8 billion.
Growth in Asia helped Ingram see a solid third quarter. It marked the third consecutive quarter of double-digit growth for sales and profits.
That’s nothing to sneeze at for Ingram, which has a business model that runs on the slimmest of profits.
Third-quarter sales were up 14% to $8.45 billion. Profits grew more than 50% to $65 million.
“We’ve seen really explosive growth due to the economies of India and China,” said Keith Bradley, Ingram’s president for the North America region. “If you look at a lot of the Asian countries, a lot of them have both natural resources exploration and U.S. companies going there to seek global IT support” such as call centers.
In some lines of business, Ingram has been able to grow faster in Asia than more established markets.
“We are one of the largest mobile handset distributors in India, and our datacenter solutions businesses in Australia and Singapore are more established than in some of our more mature markets,” Spierkel said.
New Territory
Asia is relatively new territory for Ingram Micro.
In the past few years, Ingram’s been making strategic acquisitions that have increased its market share in Asia.
Spierkel took a big role in Ingram’s 2004 buy of Australia’s Tech Pacific Ltd. for $530 million and its 1997 buy of Singapore’s Electronic Resources Ltd.
The Tech Pacific buy immediately doubled Ingram’s sales in Asia.
“We really doubled down in Asia six years ago, where we had a $2 billion Ingram-grown business,” Bradley said. “When we bought Tech Pacific that doubled. It has created a great foundation for growth in the region.”
Ingram has made several other buys in the region.
In July, it picked up Hong Kong’s Asiasoft Hong Kong Ltd., a distributor of software licenses of business applications that do virtualization, security, system and desktop management, networking and business planning. The company also does training, consulting and tech support services.
Terms of the deal weren’t disclosed.
Last year, Ingram bought two New Zealand distributors, Vantex Technology Distribution Ltd. and Value Added Distributors Ltd. for undisclosed terms.
Spierkel sees the region continuing to bolster sales.
“The macro trends in Asia-Pacific continue to be in our favor, with many industry experts expecting double-digit industry growth to continue,” he said.
Asia might end up being a bright spot in what’s seen as slowing growth ahead.
In typical Ingram style, Spierkel didn’t give financial guidance for the fourth quarter, offering a fairly muted sales outlook.
“Year-over-year sales growth may moderate compared to the rates experienced earlier in the year, as last year’s fourth quarter benefited from the launch of our sales-enhancement efforts,” he said.
For the current quarter, analysts are expecting Ingram Micro to see profits of $105 million, up about 10% from the fourth quarter of 2009, on sales of $9.5 billion, up roughly 8% from the year-ago quarter.
