Avnet 2012 Annual Report Download - page 20

Table of Contents
operating groups. The global macroeconomic environment continued to be a challenge, most notably in Europe and, to a lesser extent, elsewhere.
EM revenue of $14.93 billion declined 0.9% over the prior year and organic revenue decreased 6.0% year over year in constant currency. This
decline was primarily a result of the comparison to the particularly strong prior year and economic conditions in Europe, as previously
mentioned. TS revenue of $10.77 billion declined 6.0% over the prior year and its organic revenue declined 1.4% in constant currency over the
prior year. The double-digit organic revenue decline in EMEA was mostly offset by the double-digit revenue growth in Asia and the low single-
digit growth in the Americas. Despite the TS revenue decline, TS increased gross profit margin and operating income margin year over year
driven primarily by the combination of a focus on improving the overall performance within the EMEA region, including avoiding lower margin
sales together with the benefit from restructuring initiatives.
Gross profit margin of 11.9% improved 16 basis points over the prior year. EM gross profit margin was down 38 basis points year over
year, with all three regions experiencing declines. The Americas region was impacted by the transfer of the lower gross margin Latin America
computing components business from TS Americas to EM Americas at the beginning of fiscal 2012. In addition, the regional mix of business
was slightly more skewed to the lower margin regions in the current fiscal year as the higher gross margin EMEA region represented 28% of the
overall EM revenue mix as compared with 32% in the prior year. TS gross profit margin improved 73 basis points year over year. The year-over-
year improvement was driven by the western regions, particularly EMEA. The Americas region's gross profit margin benefited from the transfer
of the Latin America business to EM as mentioned above.
Consolidated operating income margin was 3.4% as compared with 3.5% in the prior year, which included restructuring, integration and
other charges in both periods. Excluding these charges, operating income margin was 3.7% as compared with 3.8% in the prior year as a decline
at EM offset improvement at TS. TS operating income margin increased 46 basis points year over year to 3.0%. Although EM's operating
income margin declined to 5.0% due to the overall macroeconomic conditions mentioned above, it is within management's target range for EM.
Given the level of uncertainty surrounding the global economic environment and considering management's performance expectations for
the first quarter of fiscal 2013, the Company is evaluating additional cost reduction actions to further align expenses in the business with current
market conditions.
Three-Year Analysis of Sales: By Operating Group and Geography
19
Years Ended
Percent Change
June 30,
2012
% of
Total
July 2,
2011
% of
Total
July 3,
2010
% of
Total
2012 to
2011
2011 to
2010
(Dollars in millions)
Sales by Operating
Group:
EM Americas
$
5,678.7
22.1
%
$
5,113.8
19.3
%
$
3,434.6
17.9
%
11.0
%
48.9
%
EM EMEA
4,203.3
16.4
4,816.3
18.1
3,651.1
19.0
(12.7
)
31.9
EM Asia
5,051.1
19.6
5,136.1
19.4
3,881.1
20.3
(1.7
)
32.3
Total EM
14,933.1
58.1
15,066.2
56.8
10,966.8
57.2
(0.9
)
37.4
TS Americas
5,820.6
22.6
6,404.7
24.1
4,932.7
25.8
(9.1
)
29.8
TS EMEA
3,205.6
12.5
3,577.1
13.5
2,297.2
12.0
(10.4
)
55.7
TS Asia
1,748.2
6.8
1,486.4
5.6
963.5
5.0
17.6
54.3
Total TS
10,774.4
41.9
11,468.2
43.2
8,193.4
42.8
(6.0
)
40.0
Total Avnet, Inc.
$
25,707.5
$
26,534.4
$
19,160.2
(3.1
)%
38.5
%
Sales by Geographic
Area:
Americas
$
11,499.3
44.8
$
11,518.5
43.4
%
$
8,367.3
43.7
%
(0.2
)%
37.7
%
EMEA
7,408.9
28.8
8,393.4
31.6
5,948.3
31.0
(11.7
)
41.1
Asia/Pacific
6,799.3
26.4
6,622.5
25.0
4,844.6
25.3
2.7
36.7
$
25,707.5
$
26,534.4
$
19,160.2