Ingram Micro New Zealand sees earnings dip amid softer revenue in 2024

Ingram Micro New Zealand has reported a decline in annual profit for the 52 weeks ended 28 December 2024, as softer revenue and a narrowing gross margin weighed on the bottom line despite a year of relative operational stability.

The company posted a net profit of $9.1 million, down from $15.0 million in the prior financial year—a drop of nearly 39 percent. Revenue also slipped 3.1 percent year-on-year to $654.4 million, compared with $675.3 million in 2023. This decline was primarily due to reduced demand across segments, especially in IT hardware distribution, which remains the company's core activity.

Gross profit for the year stood at $62.7 million, a decrease from $73.3 million in 2023, reflecting the tightening of margins in a highly competitive distribution landscape. Cost of goods sold reduced only slightly to $591.7 million, down from $602.0 million, narrowing the gross margin to 9.6 percent from 10.9 percent the year before.

Operating expenses saw some relief, with administrative expenses falling significantly from $5.2 million to $3.1 million, while employee benefits expenses dipped slightly to $26.5 million. However, other operating costs rose modestly to $12.1 million from $11.2 million, driven by increased bad debts and depreciation.

Finance costs declined to $1.2 million from $1.6 million, partially offset by an increase in finance income to $2.3 million. These shifts provided a marginal cushion against the fall in pre-tax profit, which stood at $12.4 million, down from $20.3 million.

From a tax perspective, the company incurred an income tax expense of $3.3 million, bringing its effective tax rate in line with New Zealand's 28 percent corporate tax rate. There was a minor favourable adjustment of $278,000 related to prior periods.

The balance sheet remained strong, with total equity increasing to $217.0 million from $207.9 million, mainly attributable to retained earnings. Total assets climbed to $403.9 million, up from $378.5 million a year earlier, buoyed by a sharp rise in trade receivables and inventory levels.

However, the cash flow position saw a substantial reversal. Net cash generated from operating activities swung to a deficit of $21.3 million, compared to an inflow of $62.6 million in 2023. This was largely due to a $50.1 million increase in trade and other receivables, coupled with a $5.0 million rise in inventory. As a result, year-end cash and cash equivalents fell to $55.2 million from $81.0 million.

Capital investment remained subdued, with $321,000 spent on property, plant and equipment, primarily directed towards computer and plant equipment upgrades. No capital commitments were outstanding as of the balance date.

The company's lease liabilities reduced to $24.8 million from $28.3 million, aligning with the gradual wind-down of certain leasing arrangements. Meanwhile, intangible assets held steady at $53.1 million, largely composed of goodwill, which remained unchanged year-on-year.

There were no significant post-balance sheet events or contingencies noted by directors, and the accounts received an unqualified audit opinion from PwC, confirming compliance with New Zealand financial reporting standards under the Reduced Disclosure Regime.

Looking ahead, Ingram Micro New Zealand is expected to face ongoing margin pressures amid uncertain economic conditions and cautious IT spending by enterprises. However, its strong equity base and stable asset position provide a measure of resilience for navigating future challenges.