ECM.L Regulatory News (ECM)

22 Mar 2005 07:00

Electrocomponents PLC22 March 2005 Embargoed until 7.00am 22 March 2005 Electrocomponents plc - Trading Update Prior to its financial year-end on 31 March 2005, Electrocomponents plc, themajor international high service distributor of electronic, electrical,industrial and commercial supplies, is today giving a trading update. The Board expects that Group profit before tax and goodwill amortisation for theyear ending 31 March 2005 will be slightly below last year. While many of ourbusinesses have shown good profit progression in this year, this progress hasbeen offset by continued pressure on gross margins, higher planned costs on oursystems projects, further investment in selling activities and higher pensioncontributions. Since we announced our first half results in November, the economic backdrop inthe UK and our other major European markets has weakened as reflected by thedecline in the Purchasing Manager Indices. Consequently, Group sales in thesecond half have grown by about 3% (at constant exchange rates and day adjusted)compared with 5.8% in the first half. February was a poor sales month in boththe UK and Continental Europe, with sales falling below our internal forecasts.In March, the incidence of Easter in the last week of our financial year islikely to have a detrimental effect on sales, but the extent is difficult topredict. (Last year, Easter fell in April.) In the United Kingdom, our sales in the second half have declined by about 1.5%on last year. Allied, in the United States, has continued to achieve strongdouble digit sales growth with stable gross margins. Our businesses in Japan,China and the rest of Asia, including Australasia, have grown strongly. InContinental Europe, sales in France were slightly ahead of the second half oflast year, recovering from a 2.6% decline in the first half, whilst growthelsewhere has been about 4%. E-commerce sales have again grown rapidly during this half-year, up about 35% onthe second half of last year, and currently running at over 22% of the Group'ssales. As previously indicated, the next European implementation of our systems projectis in the United Kingdom: our current plans show that this should take placetowards the end of the next financial year. In Asia the implementation in HongKong should be in the first quarter of the next financial year. Free cash flow for the current year will be lower than for the prior year. Thismainly reflects the cash expenditures on the systems and other projects andhigher stock levels to support sales growth and improved service levels. Thebuild up of stock to support the systems implementation in the United Kingdom isnow planned for the next financial year. The full results for the current year will be announced on 25 May 2005.International Financial Reporting Standards will be used in reporting theresults for next year whilst the current year results will then be re-statedusing these Standards. A separate announcement of the estimated impact of thisre-statement will be made in July. There will be a telephone conference call today at 10.00am for analysts andinvestors. Dial-in instructions are set out below. Enquiries: Ian Mason Group Chief Executive 01865 204000Jeff Hewitt Deputy Chairman / Finance Director 01865 204000 Details of telephone dial in instructions: Date: 22 March 2005UK Time: 10:00 am UK Dial-In: 0845 2453471Europe & International Dial-In: +44 1452542300Canada Dial In: +44 1866 4765524USA Dial-In: +44 1866 2201452Quote Reference Number: 2753994 Chairman: Jeff Hewitt Electrocomponents plc Safe Harbour Statement: This announcement contains certain statements, statistics and projections thatare or may be forward-looking. The accuracy and completeness of all suchstatements, including, without limitation, statements regarding the futurefinancial position, strategy, projected costs, plans and objectives for themanagement of future operations of Electrocomponents plc and its subsidiaries isnot warranted or guaranteed. These statements typically contain words such as"intends", "expects", "anticipates", "estimates" and words of similar import. Bytheir nature, forward-looking statements involve risk and uncertainty becausethey relate to events and depend on circumstances that will occur in the future.Although Electrocomponents plc believes that the expectations reflected in suchstatements are reasonable, no assurance can be given that such expectations willprove to be correct. There are a number of factors, many of which are beyond thecontrol of the Electrocomponents plc, which could cause actual results anddevelopments to differ materially from those expressed or implied by suchforward-looking statements. This information is provided by RNS The company news service from the London Stock Exchange