Avnet reported sales of $5.7 billion in Q2, down 8.7% year on year and up 1.1% sequentially, above the midpoint of the company’s guidance.
Commented Avnet CEO Phil Gallagher (pictured): “Similar to last quarter, our results were primarily driven by stronger than expected performance in Asia, offset by weakness in the West with Europe presenting the most challenging market conditions. Our team continues to compete well and manage the factors within our control.”
Electronic component sales were $5.3 billion in Q2, falling 8.5% year on year and rising 1.2% sequentially.
In the regions, Asia performed best. Sales rose 8.4% year on year and 4.1% sequentially to $2.7 billion. In the Americas, sales were $1.3 billion, down 13.8% year on year and up 2.9% sequentially.
EMEA endured another tough quarter. Sales fell 25.1% year on year and 5.1% sequentially to $1.6 billion.
“Asia continues to be the bright spot for our EC business with sales increasing both sequentially and year on year. We saw sequential and year on year growth in the industrial, communication and transportation end markets,” said Gallagher. “We saw a slight benefit in Asia from customers ordering due to the uncertainty of potential regulatory changes in the United States.
Gallagher continued, “In EMEA, we continue to experience weak demand across the region due to the economic backdrop and certain geopolitical factors which are all having a dampening effect on the business and consumer confidence. In the region, the aerospace and defence end market showed moderate growth on a sequential and year on year basis. In the Americas, we saw sequential growth in the aerospace and defence end markets and in select industrial end market applications.”
Farnell sales at $345.6 million were flat sequentially and down year on year.
“Farnell sales continue to be challenged given the weak macro environment in Europe where they have the highest percentage of sales,” said Gallagher. “Farnell is also facing some competitive pricing pressures for on the board components. I’m confident that we will see slow and steady improvements at Farnell as we execute against our cost reduction initiatives and focus on those growth opportunities we have control over including leveraging existing Avnet customer relationships.”
Gallagher added that Avnet did not see any meaningful increases in orders this quarter in advance of the recent tariff increases.
“Demand creation revenues increased sequentially by 5% as our field application engineers continue to drive the funnel for converting design wins into revenues. Our design registrations and wins also increased sequentially which is a positive indicator for future demand creation revenues.”
Turning to current market conditions, Gallagher said that with the exception of a slight uptick in the memory space, semiconductor lead times continue to be stable across technologies.
“Pricing is mixed with some decreases in commoditised products and increases from certain suppliers providing more complex technologies who are looking to pass along higher input costs. On the IP&E side, lead times and pricing continue to be stable,” he explained.