Supplier difficulties in Singapore undermine strong growth in second quarter results at Brightpoint
Distributor Brightpoint recorded strong growth in its second quarter results year-on-year, although faltered sequentially as it encountered problems in Singapore.
Year-on-year, revenue was up 11 per cent from $707.7 million to $788.6 million, gross profit increased from $60.1 million to $71 million and income from continuing operations more than doubled from $3.1 million to $7.3 million. The gross profit margin was up half a percentage point to nine per cent year-on-year.
Distribution revenue grew from $616.7 million in the second quarter of 2009 to $713.1 million this year, while logistic services revenue fell from $91 million to $75.5 million.
These results were delivered off a units handled total in the quarter of 22.3 million, up 18 per cent on the year-before figure of 18.8 million. Of that, 27 per cent were smartphones.
Sequentially, revenue and the total number of units handled were down one per cent from $795.3 million and 22.5 million respectively.
Brightpoint said this was due to lower sales of devices from the primary wireless device supplier to its Singapore operations. The decrease in revenue was partially offset by an increase in wireless devices handled in the EMEA region.
Revenue from sales of devices and number of wireless devices handled in Singapore for its supplier were $105.4 million and 886,000 for the first quarter of 2010 compared to $70 million and 747,000 for the second quarter, according to Brightpoint.
It said the reduction in sales was due to foreign currency fluctuations that allowed traders from other regions to sell wireless devices into markets served by its Singapore business at lower prices than those available to it directly from the supplier, as well as management and organisational changes at the supplier that has de-emphasised putting distribution through Brightpoint Singapore and threatens to reduce, or even eliminate, the supplier’s allocation of saleable products to Brightpoint.
Brightpoint has now reduced its estimate for wireless devices handled for 2010 based on the decline in wireless devices handled from the supplier in Singapore, from 101-103 million to 98-100 million, and is diversifying its business within the Asia-Pacific region in an attempt to mitigate the risk in future periods of excess concentration of business with a limited number of suppliers.
It added that there is “no certainty” it will be successful in replacing the declining sales of devices from its primary supplier in Singapore, although other Brightpoint operations have not experienced similar declines in revenue and wireless devices handled for this supplier.
Brightpoint chief executive Robert Laikin said: “Our results reflect our continued focus on execution and discipline in managing our business during difficult economic times.
“Brightpoint remains well positioned to take advantage of growing smartphone trends in the global wireless industry, and we continue to anticipate our unit growth rate to exceed the top end of analyst expectations for the wireless industry for 2010.”