Sales Up, Profits Slump At Electrocomponents

Electrocomponents reported underlying sales growth of 3% to £635.4m from £616m in its first half results. International sales grew 5%. North America sales led the way posting a 10% sales increase. Asia Pacific sales were up 5%, and Europe reported a 2% sales increase. UK sales declined 2%.
International sales driven by 10% growth in North America, 2% in Europe with Asia Pacific up 5%
Gross margin declined by 0.7% points, reflecting mix and increased discounting in UK and Asia Pacific
Headline income nosedived 16% to £37.4m, of which 10% (£4m) was due to fewer trading days and currency.
Reported profit before tax increased by 24%, benefitting from a £20m non-cash pension credit.
eCommerce sales grew of 5% and its share of the Group’s sales now stands at 58%
The Famous For product sales push, comprising electronics and automation and control, grew sales by 5%
A reorganisation of APAC and UK sales forces undertaken to drive cost efficiencies and greater focus.
In October, Group underlying sales growth was 3%. International grew by 5% and the UK declined by 3% (-2% excluding Raspberry Pi)
Group sales growth at the start of the second half has been lower than anticipated, despite the actions being put in place to improve the performance in key markets, reflecting the recent softening of the PMI indices.
Despite the continued challenging economic environment, particularly across Europe, the Group will continue in the second half to invest in its global strategy to enable market share growth over the medium term.
Departing Group Chief Executive Officer Ian Mason commented: ““In the first half Group underlying sales growth was 3%, led by a strong performance in North America. However, the UK and France were in decline in the period and below our expectations. Whilst mindful of the more challenging economic environment across Europe, we are progressing at pace with the actions to improve performance in these markets.
Our global strategy is firmly established and we have the right organisation in place to deliver it. We are implementing our strategic initiatives which are resulting in faster sales growth from eCommerce and our Famous For product categories. During the second half we will be continuing the planned investment in the strategy and are confident that it will enable us to progressively grow our market share and improve our financial performance over the medium term.”