Anixter International Inc. (NYSE: AXE), Glenview, IL, distributor of communication products, electrical and electronic wire & cable, fasteners and other small parts, reported sales of $1.27 billion for the quarter ended April 2, 2010, flat from the year-ago quarter.
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The distributor reported $44.1 million of favorable foreign exchange effects from the prior year, and $15.8 million of favorable copper price effects. Excluding these, sales decreased by 4.6 percent, with about half that due to the loss of a major customer contract.
Profit for the quarter was $5.9 million, down from $25.7 million a year ago. The decrease was primarily due to a loss associated with the early retirement of debt. Excluding this, profit would have been $24.7 million.
Robert Eck, President and CEO, said: “We entered the first quarter of 2010 with an expectation that sales would decline year-on-year, despite the improving macroeconomic trends experienced in the second half of 2009, due to several factors.
"First, as we had commented during the past couple of quarters, we believed it would take two-to-three quarters of sustained economic recovery before we would see capital spending increase to a level that would drive sales growth within our customer base. On this basis, we felt it would be late in the first quarter or early in the second quarter of 2010 before the company experienced the sales benefits of this increased capital spending.
"Secondly, during the fourth quarter we exited a major customer sales contract that had 2009 first quarter sales of $31.7 million. Lastly, the sales in our electrical wire and cable, aerospace and North American OEM Supply end markets did not hit bottom until the second quarter of 2009, leaving us with difficult year-on-year comparisons in each of those markets for the first quarter.”
Eck said a weaker U.S. dollar and stronger copper prices offset some of these headwinds, which left the company with flat sales year-over-year. “Importantly, however, we did experience some initial signs of improving sales trends within the quarter," Eck said, "including a year-on-year sales increase in our European OEM Supply end market. These improving sales trends were even more evident in the final weeks of the quarter on a broader basis, leaving us positioned, assuming a continued economic recovery, to expect year-on-year sales growth in the second quarter.”
