ECM.L Regulatory News (ECM)

Electrocomponents plc today issues a trading update for the four-month period to 31 January 2021 

LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "Revenue growth has improved in every region over the last four months as we have continued to build on our strong foundations to accelerate growth. We have ensured customer service remains our core focus. However, the heightened freight, labour and logistical costs we are experiencing are likely to persist at a time of ongoing investment in our proposition. Despite these pressures, our confidence in our strategy remains strong: customers are increasingly valuing our solutions-led and omni-channel proposition, strong operational capabilities and first-class customer service, which have continued despite the challenging times. This can be seen through the strong revenue growth and deepening customer relationships. So, whilst we remain cautious about the external environment, this positive revenue progress underpins our confidence in the Group's prospects and the significant growth opportunities in both revenue and margins we see over the medium term."

· Strong revenue performance across all regions with ongoing market share gains

o Revenue growth has been strong during the period, although the exit rate softened slightly in EMEA

o UK delivered mid-single digit growth, with France slightly stronger and Germany positive

o The Americas has benefited from a wider product offer and adjustments to our sales-led process

o RS PRO continued to outperform the Group with 14% like-for-like revenue growth

o Total digital like-for-like growth was 6%, with Group web revenue increasing 8%

· Full year profit expectations unchanged with stronger revenue growth offset by additional ongoing costs

o We have focused on maintaining customer service whilst looking after the safety of our colleagues

o Ongoing gross margin impact of elevated freight costs, inventory provisions and regional mix

o Operating cost increases from freight, COVID-related labour costs and business continuity through Brexit

o RISE programme to simplify the Group on track; due to deliver £7 million of operational savings this year

· Strong financial position supports organic and inorganic strategic growth opportunities

o Ongoing financial focus delivering strong cash flow generation during the period

o £180 million equity raise primarily to fund acquisitions, Synovos and Needlers, which are performing well

LEI: 549300KVXDURRKVWR37

Notes:

1. Consensus for the year ending 31 March 2021 is adjusted profit before tax is £175.0 million within a range of £171.1 million - £180.4 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. 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 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 £5 million on revenue from fewer trading days compared with the year ended 31 March 2020.