Arrow sees no upturn in Europe, more cuts on the way

"In global components, our revenue results exceeded the mid-point of our expectations, driven by strength in Asia as well as a solid finish to the month of June for our North American business," said Michael Long, company CEO.

"The European economies remain weak and we continue to see significant year-over-year declines in the pace of business activity," added Long.

Arrow has consistently been more reluctant than other suppliers to call an early upturn in the market.

This quarter is no different with the distributor saying the ongoing downturn in sales has put pressure on the business in Europe and further cost-cutting is expected.

"Given the market realities we are faced with, we have an additional $100m in annual cost reductions that are expected to be implemented in the second half of 2009, primarily in our European operations," said Paul Reilly, chief financial officer.

Overall, Arrow reported second quarter net profit of $21.1m on group sales of $3.39bn. This is significantly down on net income of $96.2m in Q2 2008, on sales of $4.35bn. 

Arrow's enterprise computing solutions (ECS) sales of $1.12bn decreased 19% year-on-year.

Arrow does expect flat or even a slight increase in sales in Q3 which it suggests will be in the range $3.1bn and $3.7bn.

This breaks down to Q3 component sales between $2.1bn and $2.5bn and global enterprise computing solutions sales between $1.0bn and $1.2bn.