ECM.L Regulatory News (ECM)

Electrocomponents plc today issues a trading update for its first half ended 30 September 2020 ahead of publishing half-year results on 10 November 2020. 

LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "I am very encouraged by the strength and resilience the Group has shown through COVID-19 with trading performance and market share continuing to improve. We maintain a strong balance sheet and are accelerating key strategic initiatives to drive scale and efficiency through the business. While we remain cautious with respect to the ongoing COVID-19 situation, I am confident in the Group's prospects and we are well placed to take advantage of the significant growth opportunities we see."

· Excellent continuing response to COVID-19 challenges.

o The health, wellbeing and safety of our people and partners continues to be our number one priority.

o Our broad, omni-channel offer and reliable global supply chain has driven outperformance.

o Net Promoter Score, a customer service metric, has improved year-on-year in all regions.

o Group employee engagement scores reached a record high in our most recent survey.

o We continue to play an important part in the community fight against COVID-19.

· Resilient trading performance with revenue trends continuing to improve as lockdowns ease.

o Significant market share gains where our range and solutions are most developed.

o Momentum has continued to grow throughout the second quarter.

o A strong recovery in RS PRO with 8% like-for-like growth in Q2 leading to 2% growth in H1.

o Digital has performed in line with the Group, with an improving Q2 trend.

o Initiatives on track to broaden our offer and customer spread in Americas and Germany.

· COVID-19 related issues impacting H1 profitability are expected to ease somewhat in H2.

o H1 gross margin c. 60 basis points lower after inventory provisions and increased inbound freight costs.

o COVID-19 led to higher costs from outbound freight charges and some labour inefficiencies.

o Expect £9 million COVID-19 related costs in H1.

· Accelerating activity across our business to drive a more scalable and efficient model.

o Newly expanded and highly automated Americas distribution centre is now operational.

o Germany distribution centre expansion remains on track for summer 2021.

o Making good progress to further simplify our operating model to accelerate growth.

o This will drive significant savings in the medium term and we will update the market in November.

LEI: 549300KVXDURRKVWR37

Notes:

1. Consensus FY21 adjusted profit before tax is £166.0 million within a range of £150.9 million - £175.4 million (source: Electrocomponents.com/investors/analyst-coverage)

2. Like-for-like revenue change is change in revenue adjusted to eliminate changes in exchange rates and trading days year on year. 2020 is converted at 2021 average exchange rates for the period.  

3. Our profit remains sensitive to movements in exchange rates on translation of overseas profits. Average exchange rates for the year ended 31 March 2020 for euro and US$ respectively were €1.14 and $1.27 respectively. Every 1 cent movement in the euro has a circa £1.4 million impact on annual profit. Every 1 cent movement in the US $ has a circa £0.5 million impact on annual profit.  

4. In the year ending 31 March 2021 we expect to see a negative impact of around £3 million on revenue from fewer trading days compared with the year ended 31 March 2020.