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Financial Highlights · Group underlying sales growth was flat, with 2% maintenance growth offset by 2% electronics decline. Fewer trading days and currency movements reduced Group reported sales by £22m · UK sales grew by 5%, benefitting from high maintenance exposure and Raspberry Pi * sales · International sales declined by 2%; Europe and Asia Pacific were flat, North America declined 5% · Gross margin declined by 1.2% points, operating costs grew by 3% at constant currency · Fewer trading days and currency movements reduced headline profit before tax (2) by £5m · Headline profit before tax (2) declined by 30% to £41.5m · Headline free cash flow (2) grew by 6% to £24.0m, with lower capex and improved working capital · Strong balancesheet with net debt:EBITDA of 1.2 times · Interim dividend per share maintained at 5.0 pence, reflecting confidence in long-term prospects
Electrical components distributor Electrocomponents saw its shares hammered on Friday after a disappointing trading statement, but it is still doing better than its rivals, Questor in The Telegraph notes. The consensus range for full-year pre-tax profit was £110m to £120m ahead of the statement. This has since been trimmed by about 6%.
In the opinion of Seymour Pierce Electrocomponents’s flat sales growth in the second quarter of 2013 was a decent outturn given tough comps (+8% one year ago) and the global macroeconomic background. In particular, they believe that today’s results showed that Electrocomponents is outperforming the market and its closest peer Premier Farnell. Group gross margin is expected to be 1.2% lower in the first half of 2013 given the increased use of customer discounts, changes in product mix towards lower margin products (e.g: Raspberry Pi) and adverse foreign exchange movements.
Operating costs (at constant foreign exchange) are expected to be around 4% higher than the prior year, of which around £3.5m, or a couple of percentage points, is due to previously disclosed additional costs, which are skewed to the first half. Investments to drive future sales growth and inflation are expected to have a negative impact on operating costs by a further two percentage points. The shares plunged to 195p in the first two hours of trading from 219.7p overnight, despite the group's attempts to talk up second half (H2) prospects. "We expect results in H2 to benefit from a return to sales growth and actions to improve operating margins. Sales growth should benefit from easier comparators and continued implementation of our strategic initiatives," the group's outlook statement said. "Gross margins should benefit from targeted selling price increases and actions to improve discount effectiveness. Efficiencies from the implementation of our new global organisation structure are expected to deliver cost savings of £3m to £4m in H2. Combined with other cost actions, operating costs as a % of sales should be lower in H2 than H1," the statement said. "With a strong balance sheet and leading global market positions, we believe the group is well placed to continue to take market share in international markets," declared Ian Mason, Group Chief Executive.
Electronics and maintenance products distributor Electrocomponents has warned that full year profits are likely to be lower than the market is expecting after a disappointing first half performance. The consensus forecasts for full year headline profit before tax range from £110m to £120m, and Electrocomponents said that, assuming no change in market conditions, it expects the actual number will be "slightly below the lower end of consensus." Headline profit before tax at the interim stage will be around £40m, down from £59.4m in the first half of last year. Group sales growth in the first half of the financial year is expected to be flat on the prior year, with maintenance sales growing slightly and electronics sales declining slightly. Within the period sales trends were similar between the first quarter and the second, with continuing strong comparators and a challenging economic environment. During the second quarter the rate of sales decline in North America reduced as the quarter progressed. Group eCommerce growth in the first half will be around 3% and in the UK and Continental Europe eCommerce growth is expected to be over 10%. Group eCommerce share in the first half will be around 54%, the group revealed. The group gross margin in the first half of the financial year is likely to be around 1.2 percentage points below what it was in the corresponding period of last year, for a variety of reasons, such as the increased use of customer discounts and a stronger performance from lower-margin technologies. Unhelpful exchange rates will also have an effect on margins.
Todays news will counter recent performance
Organisation structure During H1 we have made good progress implementing a new organisation structure which will enable the Group to accelerate the implementation of its strategic initiatives and drive efficiency. Further details of this are given in a separate news release published today "Electrocomponents implements new organisation structure to enable a more integrated approach to servicing its worldwide customer base". Ian Mason, Group Chief Executive, commented: "Group sales growth in H1 is expected to be flat despite strong comparators and a challenging economic environment. Although we faced a number of headwinds we have made good progress implementing a new organisation structure which will enable us to accelerate the implementation of our strategic initiatives and drive efficiency. With a strong balance sheet and leading global market positions, we believe the Group is well placed to continue to take market share in international markets."
Outlook We expect results in H2 to benefit from a return to sales growth and actions to improve operating margins. Sales growth should benefit from easier comparators and continued implementation of our strategic initiatives. Gross margins should benefit from targeted selling price increases and actions to improve discount effectiveness. Efficiencies from the implementation of our new global organisation structure are expected to deliver cost savings of £3 million to £4 million in H2. Combined with other cost actions, operating costs as a % of sales should be lower in H2 than H1. Assuming no change in market conditions we expect full year headline profit before tax(1) to be slightly below the lower end of consensus(2).
H1 financial performance We expect that headline profit before tax(1) in H1 will be around £40 million (£59.4m in H1 last year). Group gross margin is likely to be around 1.2% points below the prior year, impacted by the increased use of customer discounts, stronger performance from lower-margin technologies, including Raspberry Pi(4), and adverse foreign exchange movements. Operating costs (at constant foreign exchange) are expected to be around 4% higher than the prior year, of which around £3.5 million, or 2% points, is due to previously disclosed additional costs(5) which are skewed to H1. Investments to drive future sales growth and inflation are expected to impact operating costs by a further 2% points. In H1 there have been fewer trading days and adverse foreign exchange movements compared to the prior year, the combined impact on operating profit of which is expected to be around £5 million.
Electrocomponents plc, the world's leading distributor of electronics and maintenance products, has today issued a pre-close trading update for the six months ending 30 September 2012 ("H1"). Overview Full year profits are usually weighted to H2 and as previously indicated this trend will be more pronounced this year. H1 performance is now expected to be lower than anticipated, although we expect profits in H2 to benefit from a combination of a return to sales growth and actions to improve operating margins. Given the lower than expected H1 performance, and assuming no change in market conditions, we expect full year headline profit before tax(1) to be slightly below the lower end of consensus(2). H1 sales performance Group sales growth in H1 is expected to be flat on the prior year, with maintenance sales growing slightly and electronics sales declining slightly. Within the period sales trends were similar between Q1 and Q2, with continuing strong comparators and a challenging economic environment. During Q2 the rate of sales decline in North America reduced as the quarter progressed. Group eCommerce growth in H1 will be around 3% and in the UK and Continental Europe eCommerce growth is expected to be over 10%. Group eCommerce share in H1 will be around 54%.
http://www.investegate.co.uk/Article.aspx?id=201209280700073737N
http://www.investegate.co.uk/Article.aspx?id=201209240700079176M
rise continues - slow and sure
strong well managed business - good EBITDA levels
Electrocomponents PLC is engaged in the distribution of electronic, electrical and industrial and commercial supplies and services. It operates in 27 countries and sells to most of the remaining countries of the world via third party distributors.
spread tight
mixed sentiment here - some taking the chance to sell at 210p - I think it has a good medium term future - well run business - just needs some discussion
shares up 6% on solid RNS
there is no-one here but me, but these shares should see 250p soon imho
strong financial position sales relatively unchanged all good
solid performance in a really difficult period - strong business - reasonably priced shares
There have been no significant changes to the Group's strong financial position during the period. Ian Mason, Group Chief Executive, commented: "Sales are at a similar level to last year despite strong comparators and a challenging economic environment. We are mindful of the macroeconomic environment and, as we have demonstrated in previous years, we are able to respond quickly to changing conditions. We are well-positioned compared to the numerous, smaller distributors against whom we primarily compete, who do not have the advantage of our global scale and reach. We are therefore continuing to invest in our strategic priorities to leverage these advantages."
Electronics and maintenance products distributor Electrocomponents holds its annual general meeting (AGM) on Friday, and shareholders will be hoping that the recent revival in fortunes has continued. Back in May, the group said there had been a switch-round in recent weeks with growth in the UK compensating for a levelling out in international sales. However, Peel Hunt is not especially confident that the AGM will be a cheery occasion. "With the global macro-economic environment having deteriorated further, especially in Asia, we see increasing pressure on forecasts," the broker said. The broker is a bit more optimistic about the longer term. "Electrocomponents is a market leader and will likely benefit long-term from tough trading conditions as competitors fail, but in the short term we think global macro headwinds will weigh on the shares," it said.
Shore Capital retained its "sell" stance on Electrocomponents (ECM) ahead of its first quarter results release this Friday. The broker noted that the electronics distributor has maintained a robust performance against the weak economic backdrop, which it attributes to the firm's high exposure to maintenance and repair activity. However, when the climate improves, Shore expects the group to fall behind more cyclical peers, such as Premier Farnell (PFL). Shares in Electrocomponents inched down by 1.2p to 206.8p.