Tech Data CEO points to Q2 results as validation of strategy

Tech Data has pointed to its performance in the second quarter as a validation of its ongoing strategy to move the business to higher value propositions.

The distributor delivered a 2% increase in net sales to $9.1bn year-on-year and net income improved by 4% to come in at $79.3m. The performance in Europe was down year on year with net sales falling by 2% to $4.4bn  and as a percentage of worldwide sales the region dropped from 51% to 49%. The firm reported that servers, software, networking and PCs along with security were the segments that appealed to customers.

The firm has been following a four-pronged approach: investing in next generation technologies, strengthening the end to end portfolio, transforming its business digitally and optimising its global footprint.

Speaking on a post-results webcast the Tech Data CEO Rich Hume said that the strategy was working and it had been able to keep the revenues coming at at the same time as making a shift upstream.

"We summarise our strategy as moving to higher value. This means delivering higher value solution offerings to our channel partners, providing colleagues with enriching opportunities and providing value for our shareholders through an enhanced financial profile with emphasis on cashflow and return on invested capital. Our Q2 performance validates our strategy," he said.

"Our channel partners are responding favourably to our solutions based approach, enabling us to win new business every day," he added.

Hume has been leading efforts to streamline the distributor's costs and productivity under an optimisation programme and said the firm remained on track to enhance customer experiences, automate processes and develop staff.

"We continue to be on track to hit our goal of annual cost savings of $70 to $80m by the end of fiscal 2021, half of which will be invested back into the business to accelerate our strategic initiatives," he said.

"Our move to higher value strategy, and the various global initiatives that support it, are visibly working and played a key role in our strong first half performance," he said.

There are a few clouds on the horizon and only a brave CEO would ignore the potential problems that an ongoing trade war or Brexit might cause. But Hume said that focusing on its strategy would be its on-going approach in the second half.