22 Dec 2008 07:00
ELECTROCOMPONENTS PLC
Interim Management Statement: year ending 31 March 2009
Electrocomponents plc, the leading international high service distributor, has today issued its second interim management statement for the year ending 31 March 2009, which covers the period from 1 October to 19 December 2008. All growth rates are adjusted for trading days and foreign exchange rate movements.
Revenue
At the half year results announcement on 11 November we reported that the Group's sales in October had declined by 3% with the UK declining by 4.5% and International by 2.5%.
Since then, demand has weakened further. The Purchasing Manager Indices have fallen to record low levels in our major markets and customers are deferring projects and extending plant shut downs. This has been reflected in Group sales which, for the period from 1 October to 19 December 2008, have declined by around 5% with the UK business declining by around 6% and International by around 5%.
Within International, Europe's performance was consistent across the period whilst both the North American and Asia Pacific businesses moved from sales growth in October to decline in November and December.
On a reported basis, Group sales for the period have increased by around 2%.
Gross margin
The Group's gross margin in October and November has been stable with the first half of the financial year.
Operating costs
Given the tougher economic environment we are accelerating our cost reduction plans and targeting to reduce our cost base by an annualised £15m in the next financial year. This will be achieved by exploiting operational efficiencies from increasing e-Commerce channel share, our European logistics strategy, the benefits from our EBS platform, and local initiatives.
Foreign exchange
During the period from 1 October to 19 December Sterling has depreciated significantly against the Euro and the US Dollar and the Group's Sterling reported profit has benefited from this movement.
Borrowings
Electrocomponents has a strong balance sheet with interest cover for the first eight months of the financial year of around 14 times and total committed multi-currency facilities available to the Group at 19 December 2008 of around £286m with almost all having a maturity date of September 2012. As at 19 December 2008 net debt was around £229m with the increase since the half year principally due to the weakening of Sterling.
Ian Mason, Group Chief Executive commented:
'In the current tougher trading conditions across our markets we are taking action to improve our sales performance, maintain our gross margin and exploit operating efficiencies to reduce the Group's cost base by £15m per annum.
The Group has a strong balance sheet with committed facilities through to September 2012 and good cash generation.
With our operational efficiency actions, strong balance sheet and continuing progress on implementing our strategy, which is focussed on the two customer groups of R&D and Maintenance, the Group is well positioned to weather the current economic turbulence and deliver longer term growth.'
Enquiries:
Ian Mason Group Chief Executive 01865 204000
Simon Boddie Group Finance Director 01865 204000
John Sunnucks/ David Allchurch Tulchan Communications 020 73534200
There will be a telephone conference call today at 08.00 for analysts and investors with replay access to 31 January 2009. Dial in instructions are set out below.
| Electrocomponents plc - conference call dial in instructions | |
| Date: | 22 December 2008 |
| UK Time: | 07:50h for 08:00h |
| Chairman: | Ian Mason |
Telephone Number: +44 (0)20 7806 1967
PIN: 7524326
Electrocomponents plc - replay dial in instructions (available until 31 January 2009)
Telephone Number: +44 (0)20 7806 1970
PIN: 7524326