US-based distributor saw revenue increase driven by smartphones, but reports income of just £6.55 million as gross margin slips
Increased demand for smartphones drove revenues at global distributor Brightpoint to £755 million in the second quarter of 2011, up 57 per cent year on year and 11 per cent compared to the first quarter of 2011.
Net income hit £6.55 million for the quarter, up from £8.3 million in the same period of 2010.
The total number of wireless devices sold by Brightpoint, including tablets, was 26.9 million, up 21 per cent year on year but down 1 per cent from the preceding quarter. Brightpoint said the sequential decline was due to the firm’s Latin American operation becoming part of Intcomex.
Brightpoint said it expects to handle a total of between 111 million and 114 million devices in 2011. This represents a 12 per cent to 15 per cent increase on 2010. The firm predicts global sell-in for the wireless industry to grow by 10 per cent in 2011.
Gross margin slipped 7.5 percent during the quarte from 9 per cent in the same period of 2010, and was down slightly from 7.8 per cent in the preceding quarter. Gross profit, before administrative expenses and other charges was £57.2 million, up from 43.6 million a year ago.
The increase in gross profit was attributed to the acquisition in December of logistics company Touchstone Wireless. However, Brightpoint said that the reduction in gross margin was also partly down to the acquisition, which operates a lower margin logistics business than other parts of Brightpoint.
During the quarter, bright point incurred pre-tax expenses of £1.9 million resulting from a “seperation agreement” with former chief financial officer Anthony Boor. Boor left Brightpoint in May after after 13 years at the company, where he had been chief financial officer since 2005.
Brightpoint CEO and chairman Robert J. Laikin (pictured) said: “Our comprehensive supply chain solutions offerings enabled us to handle approximately 27 million wireless devices in the second quarter of 2011.
“I believe Brightpoint remains well positioned to capitalize on growing smartphone and tablet trends in the global wireless industry.”
Boor’s replacement, Vince Donargo, said: “I am pleased we were able to deliver strong financial results for the second quarter of 2011.
“Our ROIC was 13 percent for the trailing twelve months, which is within our long-term targeted range of 12 to 15 percent. ROTC on a trailing twelve month basis was 45 percent, which exceeds our targeted long-term range of 35 to 40 percent.
“Both of these improved ratios reflect our disciplined and successful approach to managing our balance sheet and our overall business.”