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Surely see this back above 200 before close
Panmure Gordon downgrades Premier Farnell from hold to sell, target price reduced from 265p to 200p Story provided by StockMarketWire.com
Given that both principal Board members have recently bought at over 250p, Mr Market appears to be presenting us with an opportunity at these levels, since a slow down in growth appears to be the only issue. This is a great company in a good sector.
maybe good for a day trade, considering its only a marginal difference but with a big slide...
CONT. We continue to invest in our customer proposition to take advantage of the growth opportunities inherent in our strategy. This strategy has successfully delivered growth by increasing customer numbers, focusing on the web, achieving cost efficiencies, and growing the EDE and specific MRO segments in mature and developing markets. Importantly our gross margins remain stable and we continue to acquire customers in-line with our target, through increased year on year web penetration. This strategic investment will be managed in line with current activity levels and further supplemented by cost savings and an even greater focus on efficiency to ensure the business is appropriately structured for the future. Our continued business transformation, with an increased focus on the lower cost web channel, enables us to take steps to reduce our costs faster and more efficiently than before in response to the difficult market conditions. As we did successfully when markets last slowed we will now accelerate and intensify the execution of our reshaping and cost reduction programmes. We anticipate that the benefits of these cost actions during the balance of the year will mitigate substantially the impact of the lower sales growth rates, and therefore the Board continues to believe that Premier Farnell will deliver profitable growth this year, albeit marginally lower than our previous expectations.
TRADING UPDATE Premier Farnell plc, the leading distributor of products and services to engineers and purchasing professionals globally, announces an update to investors following the close of its June trading period. After two full months of trading in the second quarter year-on-year sales growth for May and June combined was lower than our target range of 6-8%, at 1.4%. Although June sales per day were stable with May, this performance reflects a marked moderation of growth rates in all global markets during June, particularly Europe and North America, and compares to the strong performance reported in Q2 last year when we delivered growth of 30%. As a result of the rapid change in the global business environment since our last statement, and recognising the limited visibility in our business model, the Board now expects that second quarter revenue growth will be less than the targeted range of 6-8% over the prior year. It is now apparent that significant inventory purchases were made in April and early May by industrial and technology customers to service their underlying demand following the Japanese earthquake. In light of the global slowdown this inventory is now likely to take longer to be utilised before purchasing returns to more normal levels.
Premier Farnell’s share price had risen by more than 50% since the start of 2010 before yesterday’s 9% fall, so a correction was probably inevitable as soon as the electronics distributor undershot the market’s forecasts. Though Asian markets such as China, sales up 14%, and India, up 50%, continue to grow strongly, the Singaporean and Malaysian businesses disappointed, in part because management were distracted by the disaster in Japan. The shares, at 252p, are on less than 13 times this year’s earnings, while the strong balance sheet allows the prospect of higher dividends and a yield that could approach 5 per cent. But when the market flips like this, short-term progress could be slow, says the Times. The Independent says Premier Farnell shares trade at about 13.5 times forecast full-year earnings, falling to about 12.5 times 2012 levels. That’s in line with historic multiples, though cheaper than rival Electrocomponents, with a serviceable yield of 4 per cent. Given our concerns and yesterday’s statement, however, they look fairly valued, says the paper, which has an ‘avoid’ stance on the shares.
Asian issues blight Premier Farnell growth Date: Thursday 16 Jun 2011 LONDON (ShareCast) - Electrical components distributor Premier Farnell said sales levels have rebounded above those it was achieving ahead of the global downturn as it posted a rise in revenues and profits. The Leeds-based company, which operates around the world, posted a pre-tax profit (adjusted to take account of a disposal) of £24.1m in the quarter to the end of April, up from £21.4m over the same period the previous year. Revenues climbed to £252.5m from £244.9m. Though sales grew above the group's targeted range of 6%-8%, initial reaction to the results was negative, with the shares falling sharply in the first hour of trading on Thursday. The overall results were marred by a 3.7% fall in sales in the company's Asia-Pacific region. Broker Singer Capital Markets said: "Action is being taken to fix the issues in Asia where revenue growth and customer focus has disappointed and this has held back Q1 profit by around £2m." “When we look back to pre-recessionary levels, adjusted group first quarter sales are up over 10% and we are now achieving structural year on year sales growth beyond the levels that we had prior to the recession,” chief executive Harriet Green said. “Although we recognise that our business model inherently provides us with limited visibility, the board expects second quarter sales growth to be in-line with our target range and remains confident that the group will continue to capitalise on the profitable growth opportunities inherent in its strategy.” Premier Farnell said that it took action to increase its inventory by £6m after the earthquake and tsunami in Japan and that £2.2m of this was received by the quarter end.
Subsequent to quarter end, Valerie Gooding CBE succeeded Sir Peter Gershon as Chairman of the Board at the Company's AGM. We expect to be announcing the appointment and joining date of our new CFO shortly.Commenting on the results, Harriet Green, Group Chief Executive, said: "The Group's sales momentum strengthened in the first quarter, with sales up 3.0% quarter on quarter and 8.3% year on year, which is above our targeted 6%-8% range. Our operating profit grew 13.3% year on year, a performance which was led by the North American business, where first quarter operating profit grew 51.8% year on year. "We remain focused on delivering sustainable profitable growth across the economic and product cycles. When we look back to pre-recessionary levels, adjusted Group first quarter sales are up over 10% and we are now achieving structural year on year sales growth beyond the levels that we had prior to the recession. Although we recognise that our business model inherently provides us with limited visibility, the Board expects second quarter sales growth to be in-line with our target range and remains confident that the Group will continue to capitalise on the profitable growth opportunities inherent in its strategy."
http://www.investegate.co.uk/Article.aspx?id=20110616070000P0A51
At Panmure Gordon, Andy Brown described the results as "solid". He added: "The dividend increase was also better than expected, reflecting management confidence. The current year has started well, with positive sales momentum continuing. We stay positive, but recognise that comparative trading periods will get tougher for the group."
Seymour Pierce's Caroline de La Soujeole said: “We reiterate our buy stance and our target price of 340p. We are currently expecting pre-tax profit of £107 million, which puts the shares on an adjusted price/earnings of 13.2x full year 12e which is well below the high point of previous cycles.”
SP has been above the 300 mark of late. Who would bet against it getting back up there again in the very near future.
Commenting on the results, Harriet Green, Group Chief Executive, said: "We have delivered the highest level in Group sales and operating profit for the fourth quarter for more than 10 years, with year on year growth of 13.9% and 31.6%, respectively, despite the tougher comparators. Sequentially sales grew 2.0% over the prior quarter which is counter seasonal for our business. Our focus on driving market share gains and the strength of our proven global strategy underpins this acceleration in our quarterly sales performance. "This sales momentum from the fourth quarter has continued into the new financial year. The month of February saw the two highest day's sales ever recorded within our European business and for the Group sales grew 8.0% year on year. This level of growth is despite the weather disruption in the US that continued from January into February and after adjusting for the impact of the TPC Wire and Cable disposal. The extent of the disruption to the electronics supply chain caused by the recent environmental disasters in Japan is not yet fully understood. However, the Group's Japanese customer base and direct supply chain are very small, and it is clear that Premier Farnell's significant inventory and support to all its customers and suppliers will be invaluable at this time. "The strength of the Group's performance in financial year 2011 together with this positive start to the new year, underpins the Board's decision to raise the proposed final dividend per share by 15.4%. Through driving further market share gains and the continued execution of our strategy the Group is well positioned to deliver sales growth in the new financial year that is in excess of our targeted level of sales growth."
Strategic Highlights * In the fourth quarter our MDD active customer base grew 5.9% year on year. * eCommerce accounted for 51.1% of MDD sales in the fourth quarter, the first time over half of MDD sales have come via e-channels. Progress has continued in the new year, with eCommerce sales in Europe currently running at over 70%. * Emerging markets of Greater China, India and Eastern Europe delivered strong sales growth in the fourth quarter of 39.8%, 74.0% and 51.2%, respectively. * Full year EDE year on year sales growth of 38.3% has contributed to our EDE sales penetration level reaching 53.7% - which is within our target range of 50%-70%. * In the year we signed 43 supplier agreements, including new partnerships with three engineering services and software organisations, and added 72,500 new EDE products. * We have begun to build a holistic EDE ecosystem proposition as we partnered with our first specialist prototyping partner, Pentalogix, and made the initial launch of our new rapid prototyping service. * The element14 community saw close to half-a-million customers visit the site in the fourth quarter.
Financial Highlights * Sales momentum from the prior quarter has continued as we delivered our highest fourth quarter sales for more than 10 years. Group sales grew 13.9% year on year and 2.0% sequentially on the prior quarter, leading to full year sales growth of 21.4%. * Fourth quarter Group operating profit grew 31.6% year on year to reach the highest level for more than 10 years. Full year Group underlying operating profit grew 48.1%, led by MDD Americas where full year operating profit grew 129.9% year on year. * In the fourth quarter our MDD division had its strongest absolute sales per day performance for the year, as sales in Europe, North America and Asia Pacific grew 23.0%, 11.0% and 12.4%, respectively, year on year. * Gross margin in the fourth quarter improved again, up 1.5 percentage points year on year and 0.7 percentage points on the prior quarter to 41.8%. This is the ninth consecutive quarter of sequential improvement. * The Group's fourth quarter return on sales was 11.7%, up 1.2 percentage points year on year. * Our global MDD division delivered a fourth quarter return on sales of 13.1%, led by the improvement in MDD Americas as the division delivered a fourth quarter return on sales of 9.0%. * Group cash performance has remained strong, with full year underlying cash flow conversion at 91.7%. * The Board has recommended a final dividend of 6.0 pence per share, an increase of 15.4% on the prior year. This leads to a proposed full year dividend of 10.4 pence per share, a year on year increase of 10.6%.
http://www.investegate.co.uk/Article.aspx?id=20110317070000P05EE
Premier Farnell growth story continues Date: Thursday 17 Mar 2011 LONDON (ShareCast) - Profits were in line and sales a little higher at electronic and industrial components supplier Premier Farnell last year. Revenue in the year to 31 January 2011 rose 21.4% to £990.8m from £795.3m the year before. The market had been expecting a figure of around £982m. Underlying profit before tax rose by 70% to £93.3m, a shade below the market consensus of £93.5m, from £54.8m a year ago. Underlying earnings per share (EPS) rose in line with profits, from 10.7p to 18.3p, versus market expectations of EPS of 18.13p. Fourth quarter growth was below that seen in other quarters, however, as the company ran up against tougher year-earlier comparatives. Fourth quarter sales rose 13.9% to £242.5m from £207.5m the year before while underlying profit before tax climbed 38% to £23.7m from £17.2m in the final quarter of fiscal 2009/10. However, fourth quarter sales were the highest they have been for more than 10 years, and were up 2.0% on the preceding quarter. “This sales momentum from the fourth quarter has continued into the new financial year,” the company said. Gross margin in the fourth quarter improved again, up 1.5 percentage points year on year and 0.7 percentage points on the prior quarter to 41.8%. This represented the ninth consecutive quarter of sequential improvement. A final dividend of 6.0p has been proposed, up 15.4% on the previous year, taking the full year dividend up to 10.4p, an improvement of 10.6% on the prior year.
That's enough for me (288.8p), nice little return and will perhaps wait for the re-trace if there is any. GL to those left in.
Good for a short term recovery over a day or so for a few % gain? IMO.
With shoots of economic recovery this company seems undervalued and arguably Electrocomponents too. Thoughts?