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Higher margin business helps Insight in Q2
Channel player might have seen sales remain flat but the CEO is remaining confident about the prospects for the second half
Insight has increased its full year guidance after delivering its second quarter numbers for the three months ended 30 June with its focus on higher margin business delivering.
The channel player saw its net sales remain flat year-on-year and earnings from operations decrease by 3% but gross profit improved by 4% to $275.4m as the business moved to higher margin areas, including cloud solutions and its hardware sales. Net sales in EMEA were down by 7% in the quarter, coming in at $379.2m.
Days before the second quarter ended Insight splashed out $581m for IT products and services player PCM in a move that would give more access to a number of high-profile UK customers.
PCM is an US outfit that operates across the US, Canada and the UK with more than 40 offices and 4,000 staff. The last 18 months have seen it expand aggressively with the acquisitions of Stack Group and Provista UK.
Although it is too early for that deal to have any impact on the numbers the deal adds to a sense of momentum in the business. Insight is expecting to gain "annual run-rate cost synergies of approximately $70 million," from the PCM acquisition by the end of 2021, with more than half of that coming in the first 12 to 18 months as the combined operation looks to consolidate real estate, IT and delivery systems and operational integration.
“In the second quarter we executed well against our strategy to deliver IT solutions to our clients globally, leading with services and solutions that drive business outcomes for our clients and result in improved profitability for our business. We also announced plans to acquire PCM to strategically expand our scale and reach with new clients in North America and EMEA,” stated Ken Lamneck, Insight president and CEO.
“Our execution so far in 2019 has driven earnings results ahead of our expectations and our core business is on track to exceed our previously stated financial targets for 2019 while we also work to expeditiously close the acquisition and begin integrating PCM’s business into ours. We are excited about the opportunities to create additional value in our business as we head into the back half of 2019 and beyond,” he added.