Avnet has posted Q3 sales of $7.1 billion, an increase of 34% year-on-year and 13% sequentially.
Commented Avnet Chief Executive Officer Phil Gallagher (pictured): “Sales and earnings exceeded our expectations, with double-digit sales growth both sequentially and year over year. Our team is executing well, driving improved operating margins and leverage, supported by continued disciplined cost management and inventory optimisation.
“The investments we have made in our capabilities and digital infrastructure are paying off. We see the momentum building in our business, indicative of broadening strength across all regions in our core markets. Avnet is well-positioned to drive profitable growth and expect to continue progressing toward our prior peak margin levels.”
Electronic component sales soared 34.7% year-on-year to $6.66 billion.
All Avnet’s electronic components regions reported sequential and year-on-year sales growth and Farnell posted a third consecutive quarter of double-digit year-over-year sales growth.
In the Americas sales rose 26.7% year-on-year to $1.62 billion. Sequentially sales were up 12.5%.
EMEA sales surged 31.3% year-on-year from $1.55 to $2.04 billion. Sequentially sales advanced 19.4%.
Asia sales climbed 39.3% year-on-year to $3.45 from $2.48 billion. Sequentially sales grew 9.1%.
Farnell Q3 sales were $454.7 million, a rise of 24% year-on-year and 6.5% sequentially.
Added Gallagher: “Our double-digit year-on-year sales growth was led by another quarter of record revenues in Asia, along with better than typical seasonal growth in the Americas and Europe. From a demand perspective, market conditions continue to improve across the majority of the verticals we serve, which includes data centre, industrial, aerospace and defence, transportation, consumer, and networking. The third quarter was led by strong demand in industrial, networking, and our data centre end markets. Year-over-year, we also saw broad-based improvement across most verticals, led by the data centre.
“This burgeoning demand is now impacting component lead times,” Gallagher noted.
“Over the past 90 days, the lead time environment has shifted. Component lead time trends are increasing across many product categories. We have seen lead time extensions in over 50% of the product categories we track, traversing semiconductors and interconnect, passive, and electromechanical, with stability being reflected in the balance.”
Lead time shifts are not confined to components supporting data centre and AI builds.
“They are now spreading to a broader set of products supporting diverse end market applications,” said Gallagher. “Customers are increasingly recognising the challenges of a tightening supply environment and are turning to Avnet’s proven expertise to help manage their component supply chains. Our backlog is growing, and our book-to-bill ratios are well above parity in all regions.”
Prices are also trending upwards. “In the December quarter, we saw early indicators of certain component price increases,” added Gallagher. “During the March quarter, we have seen price increases across a few suppliers and technologies, most predominantly related to memory. We expect to see additional price increases over the next several months, the majority of which are being driven by increases in the underlying input cost of components.”
Demand creation activity remains robust at Avnet.
“Design wins continued to convert to sales and interconnect, passive, and electromechanical or IP&E business outperformed, reflecting the benefits of our technical capabilities and our focus on the total solution selling,” said Gallagher.
“Now, turning to Farnell. We are seeing steady progress in Farnell’s performance and recovery. Sales grew double-digits year-over-year for the third consecutive quarter. Gross margins and operating margins expanded in line with expectations, and the business remains on track with its return to double-digit operating margins over the next several quarters. Our Power of One focus is gaining traction as we leverage Avnet’s scale and relationships with Farnell’s capabilities and offerings. This unique combination differentiates Avnet and strengthens our value proposition to suppliers and customers.
“Farnell’s continued investment in its e-commerce platform, customer experience, and inventory proposition positions us well as demand accelerates. Throughout this cycle, we’ve remained committed to investing in the future of Avnet with a focus on the long-term opportunities we see for the demand of electronic components. Our adaptability has never been more critical. The proliferation of electronic components continues at a rapid pace with emerging opportunities in drone technologies, robotics, and edge AI as just a few examples of the future trends. We have made substantial investments in our digital platforms and capabilities, supply chain and distribution centre infrastructure, and engineering resources. These investments are not just about near-term efficiency. They’re about future-proofing our company and ensuring we can support increasingly complex supplier and customer needs as technology and supply chains evolve. At the same time, we have stayed disciplined in managing expenses, optimising inventory, and allocating capital.”
