ECM.L Regulatory News (ECM)

8 July 2021, 7.00 am

Electrocomponents plc today issues a trading update for the first quarter ended 30 June 2021

LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "Electrocomponents has delivered a very strong trading performance across all regions during Q1 due to ongoing market share gains as our offer continues to resonate with our customers, an improved market backdrop and weaker comparatives. We expect industry supply chain constraints to reduce both product availability and customer demand into the balance of the year, thereby slowing top line growth, albeit we expect to still deliver at least twice the industry growth. Despite the external pressures, including cost inflation, we remain well positioned strategically and continue to focus on investing in the business to support the exciting growth opportunities we see."

Strong revenue growth as we continue on our Destination 2025 journey of growing profitable market share

· One-year like-for-like Q1 revenue growth was 37%, with acquisitions contributing a further 7%, foreign exchange being a 6% headwind and additional trading days adding 1% to give total revenue growth of 39%.

· Our Q1 outperformance was due to strong ongoing availability, our differentiated product and service solution offer and being digitally-enabled which drove market share gains in all key markets.

· EMEA performed well given the UK, which accounts for over 35% of the region's revenue, was in lockdown during the period and our European operations were dealing with slower custom controls after Brexit.

· Americas performance reflects the significant change in our management and sales team focus, improved digital and marketing returns, sharing Group expertise and a wider product offer from our distribution centre extension.

· Asia Pacific growth is underpinned by an improved salesforce focus and the buoyant electronics market.

· We are integrating acquisitions well and delivering cross-selling opportunities across product and service solutions.

· One-year like-for-like Q1 revenue growth at our own brand RS PRO was 36%, benefiting from targeted marketing.

· Web one-year Q1 revenue increased 41% like-for-like, with like-for-like digital participation of 63%.

Improving operating efficiency, although additional costs relating to COVID-19 and Brexit remain

· Product management work to drive gross margin benefits is largely offset by regional mix dilution. The full year gross margin is expected to be broadly flat before adding back the impact of the 2020/21 PPE inventory provisions.

· The higher freight and costs to serve relating to COVID-19 and Brexit in 2020/21 have continued into 2021/22.

· We continue to invest in our operating model as our RISE initiative to improve agility drives cost savings.

· Our cash generation remains strong, supporting investment for future growth.

We continue to make progress towards our medium-term mid-teens adjusted operating profit margin target

· We are working closely with suppliers to ensure our availability and delivery remains industry leading which we believe, along with our differentiated proposition, has underpinned our strong performance in the first quarter.

· While supply chain challenges and stronger comparatives will slow industry growth for the remainder of the year, our strong start leaves us on track to deliver low double-digit to mid-teens like-for-like revenue growth for the full year, supporting a return to an adjusted operating profit margin around 2019/20 levels.

LEI: 549300KVXDURRKVWR37

Enquiries:

Notes:

1. Consensus for the year ending 31 March 2022 is adjusted profit before tax of £252.6 million within a range of £241.0 million to £273.4 million (source: electrocomponents.com/investors/analyst-coverage).

2. Like-for-like revenue growth is growth in revenue adjusted to eliminate the impact of acquisitions and the effects of changes in exchange rates and trading days year on year. Acquisitions are only included once they have been owned for a year, at which point they start to be included in both the current and comparative periods for the same number of months. 2020/21 is converted at 2021/22 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 2021 for euro and US$ respectively were €1.121 and $1.308 respectively. Every 1 cent movement in the euro has a circa £1.5 million impact on annual adjusted profit before tax. Every 1 cent movement in the US$ has a circa £0.4 million impact on annual adjusted profit before tax. If June rates persist, we would expect around a £10 million adverse impact to adjusted profit before tax in the full year.

4. We expect to see a positive impact of around £9 million on revenue from additional trading days in 2021/22 compared with 2020/21.

Conference call details

There will be a conference call for analysts and investors today at 8.00am BST via an audio conference call. A replay of the conference call will be provided shortly after the event via the investor relations page of the Electrocomponents website: https://www.electrocomponents.com/investors

Pre-registration link

If possible, please pre-register for this call to join digitally (without an operator), via the following link: https://www.incommglobalevents.com/registration/client/7951/electrocomponents%E2%80%99-trading-update/

Conference call timing

Date: Thursday 8 July 2021

Time: 8.00am BST

Participant dial-in via operator 

United Kingdom (local): 020 3936 2999

All other locations: +44 20 3936 2999

Access code: 154966 - Participants will be greeted by an operator who will register their details.

Online replay 

Access details: A recording will be available until Thursday, 15 July 2021 

Click on the following link and enter the access code: 694032

https://www.incommglobalevents.com/replay/6237/electrocomponents%E2%80%99-trading-update/

Telephone replay 

Access details: A recording will be available until Thursday, 15 July 2021 

United Kingdom: 020 3936 3001 

USA: 1 845 709 8569 

All other locations: +44 20 3936 3001 

Access Code: 694032