The EMS sector performed reasonably well in the first quarter. If the macroeconomic environment improves in a meaningful way, the EMS sector will see improving results in the second half of the year. Arrow Electronics, Inc. reported Q1'14 net income of US$107.1mn, compared with net income of US$77.9mn in Q1’13. First quarter sales of US$5.08bn increased 5% from sales of US$4.85bn in the prior year. Global components first-quarter sales of US$3.42bn increased 7% YoY. Europe and Asia Pacific regions boosted demand, with the Global Component segment reporting the highest growth of 7% YoY.
Net sales of Flextronics for Q1'14 was US$6.7bn, higher than the Company’s previously provided revenue guidance of US$5.9bn, to US$6.3bn. Flextronics’s adjusted operating income increased US$76mn or 72% YoY, to US$182mn. Net income includes US$55mn of other charges recorded in the quarter ended March 31, 2014 due to a contractual obligation. The Company and the customer are finalizing an amendment to the manufacturing agreement, which includes a waiver of the US$55mn obligation. The Company believes the amendment will be executed in the current June quarter, upon which the Company will reverse this charge in the period the amendment is executed with no impact to cash.
Ingram Micro’s worldwide sales increased by US$122mn to US$10.4bn in Q1’14, up 1%. Gross profit was US$611mn (5.88% of total sales), compared with US$585mn in Q1’13. Operating income was US$68.4mn, compared with Q1’13 operating income of US$90.8mn. Net income was US$24.8 mn, or 16 cents per diluted share. This dip in profits was due to integration and transition costs related to the company's organizational effectiveness programs and continued BrightPoint integration.