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Trading Statement

23 Mar 2020 07:00

RNS Number : 1202H
Electrocomponents PLC
23 March 2020
 

Electrocomponents plc today issues a pre-close trading update for the year ending 31 March 2020 and an update on COVID-19, ahead of reporting full-year results in May 2020.

COVID-19 update

As we closely monitor the impact of COVID-19, our priority is to safeguard the health and wellbeing of our employees and to continue to support our customers and suppliers across the globe. As we do so, we are adhering to advice from government health agencies including the World Health Organisation.

In January we formed a central crisis management team to manage our response to the outbreak in Asia Pacific and our experience there has meant that we have been able to quickly implement business continuity plans across the globe. These plans include:

· Monitoring inventory and our supply chain to ensure consistency of supply,

· Building continuity plans for our distribution centres, and

· Extensive home working for our office-based teams.

These plans are working well and the response of our people has been outstanding. At the present time, all our distribution centres around the world remain open and operating effectively, with the exception of our distribution centres in France and Italy. We are currently servicing our French and Italian customers out of the UK. Our online business model continues to differentiate us and has helped us maintain service levels to our customers which include critical industries such as the public sector, food and beverage, power generation and utilities. However, whilst we continue to be able to manage the supply side, there is now evidence that increasing restrictions in some of our major markets are impacting demand. 

Current trading

Up to and including the week ended 15 March 2020, the Group saw limited impact from COVID-19 on levels of customer demand.

· Group like-for-like(1) revenue growth in the 11-week period ended 15 March was c. 4%.

· All three regions saw positive like-for-like revenue growth across the period, with EMEA up 3%, Americas up 3% and Asia Pacific strongly up 11%.

While market conditions are changing rapidly and it is difficult to draw conclusions from a single week of trading, it is notable that in the week ended 22 March like-for-like Group revenue growth has slowed to a high single-digit decline. Revenue trends have worsened across the week and volume levels vary considerably between markets. Those markets where public mobility has been most restricted, such as Italy and France, are seeing the largest impact with volumes down significantly driven primarily by lower demand. Other markets, where restrictions are only just now being implemented, such as the UK and US, are seeing a more modest impact on revenue at this stage.

While we currently expect to deliver adjusted(2) PBT for the year ending 31 March 2020 around the bottom end of our current market consensus(3) range, it remains a rapidly evolving situation. It remains too early to assess the impact that the unfolding COVID-19 situation will have on trading in the year ending 31 March 2021.

Balance sheet and liquidity

We enter this period of uncertainty in a strong financial position with a cash generative business model.

· At 30 September 2019 net debt to adjusted EBITDA was 0.9 times and adjusted EBITA to interest was over 40 times.

· Our financial covenants are net debt to adjusted EBITDA < 3.25 times and adjusted EBITA to interest of > 3 times.

· Net debt on 29 February 2020 was £209 million (including £57 million of lease liabilities), down from £221 million at 30 September 2019.

· Current committed facilities amount to £380 million, with over £340 million of these facilities maturing beyond July 2022. As of 29 February 2020, c.£180 million of our facilities are undrawn.

Mitigating actions

In anticipation of lower demand levels in the short term we are acting now to protect profitability and to conserve cash, while seeking to ensure the Group is well placed to benefit when the recovery takes place. We are reviewing all discretionary expenditure, both operating and capital, and considering suitable government assistance programmes in the markets in which we operate to preserve the productive capacity of the business as far as possible.

We will continue to support the needs of all our customers, suppliers and employees through this challenging period. Electrocomponents is also assisting the fight against COVID-19 by supporting one of the UK manufacturing consortia as they seek to rapidly develop new medical ventilation equipment.

Overall

The Group's strong financial position, coupled with our differentiated online business model, global distribution network and strong supplier relationships, means that we remain well positioned to weather the present crisis and to continue driving growth and market share gains over the medium term.

LEI: 549300KVXDURRKVWR37

 

Enquiries:

David Egan

Chief Financial Officer

020 7239 8400

Polly Elvin

Head of Investor Relations

020 7239 8427

Martin Robinson/ Lisa Jarrett-Kerr

Tulchan Communications

020 7353 4200

 

Notes:

1. Like-for-like revenue growth is growth in revenue adjusted to eliminate the impact of acquisitions, 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. 2019 is converted at 2020 average exchange rates for the period.  

2. Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, substantial asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax.

3. The current consensus range for adjusted PBT for the year ending 31 March 2020 is £209.2 million to £216.0 million.

4. Our profit remains sensitive to movements in exchange rates on translation of overseas profits. Average exchange rates for the year ended 31 March 2019 for euro and US$ respectively were €1.13 and $1.31 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.  

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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