WESCO's Q3 Sales Down YOY, Profit Drops

While sequential sales were flat and profit had a considerable increase, the company credited the year-over-year declines to foreign exchange headwinds and weakened industrial demand.

​WESCO International – No. 6 on Industrial Distribution's 2015 Big 50 List – reported its 2015 third quarter financial earnings on Thursday for the period ended Sept. 30.

The Pittsburgh-based company reported Q3 sales of $1.92 billion, down 7.4 percent from last year's $2.08 billion. Organic sales decreased 5.3 percent, while WESCO said currency headwinds negatively impacted sales by 4.1 percent. Acquisitions had 2.0 percent positive impact on sales. Q2 had identical sales of $1.92 billion.

Q3's total profit of $63.5 million was a 21.4 percent decrease from last year's $80.8 million, and a 22.6 percent increase from Q2's $51.8 million.

Operating profit of $106.3 million was down from last year's $133.2 million.

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"Our third quarter sales declined 7 percent reflecting continued foreign exchange headwinds and weakness in the industrial market and certain non-residential construction sectors," said John Engel, WESCO CEO. He noted that organic sales momentum slowed 4 percent in the U.S. during Q3, and 10 percent in Canada.

For the first 9 months of 2015, WESCO's sales of $5.66 billion were down 4.0 percent from last year. The company said organic sales decreased 1.9 percent, while foreign exchange rates and a reduced number of workdays negatively impacted sales by 3.2 percent and 0.5 percent, respectively. Acquisitions positively impacted sales by 1.6 percent.

Profit for the first 9 months of 2015 was $162.3 million, down 19.5 percent from last year.

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"We expect reduced demand in commodity-driven end markets and foreign exchange headwinds to continue into 2016," Engel said. "The completion of cost reduction actions initiated in the second quarter are improving our second half profitability. We are continuing to simplify and streamline the business in the fourth quarter by reducing management structure and expect these changes to further improve our operational effectiveness while reducing costs in 2016.

"Our capital structure remains in good shape, and we will continue to take a disciplined approach to strengthening our electrical core and expanding our portfolio of products and services through acquisitions. As consolidation and outsourcing accelerate in our industry, customers are looking for a one-stop-shop to manage their global supply chain needs, and WESCO is well positioned to deliver on these expectations."