Trading Statement

RNS Number : 0722Q

Electrocomponents PLC

03 April 2009

 

ELECTROCOMPONENTS PLC 

Trading update: year ended 31 March 2009

Electrocomponents plc, the leading international high service distributor, has today issued its trading update for the year ended 31 March 2009. 

Revenue 

All sales growth rates are adjusted for trading days and foreign exchange rate movements.

Group sales for the year ended 31 March 2009 declined by around 5% with the International business declining by around 5% and the UK by around 7%. Within the International business Europe declined by around 7%, North America by around 2% and Asia Pacific has been flat.

Since the first half of the financial year, when Group sales increased by 1%, trading conditions have deteriorated across all of the Group's regions.  Customers have deferred projects and many organisations have announced redundancy programmes and extended seasonal plant shutdowns.  The Purchasing Manager Indices have fallen to record low levels in our major markets.  Consequently in the second half of the financial year Group sales declined by around 11%.  

In the final quarter, Group sales declined by around 16%, with a broadly similar rate of decline across the period.  Europe declined by around 16%, North America by around 19%, Asia Pacific by around 19% and the UK by around 14%.

e-Commerce sales increased by around 10% in the year.  The e-Commerce share of Group sales increased from 31% to 36% year on year and exited at around 40%.

On a reported basis Group sales for the year ended 31 March 2009 are expected to be around 5% higher than last financial year due to the depreciation of Sterling.

Gross margin 

The Group's full year gross margin was slightly higher than the first half of the financial year.

Operating costs

In December we announced a target to reduce our cost base by an annualised £15m in the next financial year.  

Actions have now been taken which exceed this target and achieve annualised cost savings of around £18m, including a net reduction of around 470 employees which represents 8% of the total Group headcount, and other significant measures to reduce costs.

These actions have been taken across all regions of the business. They have been enabled by the increasing e-Commerce channel share, greater use of marketing, strong control over discretionary spend, redistribution of activity between the Group's two UK warehouses and exploiting the benefits of our systems infrastructure. 

We will continue to actively manage costs across all areas of the Group.

Cash flow and borrowings

The Group's cash flow generation has been robust particularly from working capital and the tight control of capital expenditure.

The Group has a strong balance sheet with interest cover for the financial year of around 14 times.  As at 28 February 2009 net debt was £226m after the payment of the Group's interim dividend of £22m in January 2009 and total committed bank facilities were £313m with £280m having a maturity date of September 2012.  

Profit

We expect that the Group's reported headline profit before tax for the year ended 31 March 2009 will be in a range of £85m-£88m.

Dividends

In the current difficult trading environment our focus is on maintaining the Group's financial strength. Therefore the Board has decided that it would not be appropriate to pay the special dividend of 7.4p per share which was proposed in May 2008.

However, the Board intends to recommend the payment of a final ordinary dividend of 6p per share which, combined with the interim dividend of 5p per share paid in January 2009, would give a total dividend for the financial year of 11p per share.

Ian Mason, Group Chief Executive, commented: 

'We continue to manage the business tightly in difficult market conditions. Gross margins have been stable, costs reduced significantly, cash generation has been robust and financial strength maintained.'

Electrocomponents will announce its preliminary results for the year ended 31 March 2009 on 29 May 2009.

Enquiries: 

Ian Mason                    Group Chief Executive                   01865 204000 

Simon Boddie              Group Finance Director                 01865 204000 

John Sunnucks            Tulchan Communications              020 7353 4200 

There will be a telephone conference call today at 08.00h for analysts and investors with replay access to 17 April 2009. Dial in instructions are set out below.

Conference Call Dial-in details for Electrocomponents plc Trading Update
Date:	Friday 3 April 2009
UK time:	07:50h for 08:00h
UK dial-in:	0844 493 3800
International dial-in:	[phone]
Canada dial in:	1866 966 0399
USA dial-in:	1866 966 9439
Quote reference number:	92122886
Chairman:	Ian Mason Electrocomponents plc

Replay detail-in Instructions (available until Friday 17 April 2009)
Date:	Friday 3 April 2009
Replay availability:	From Friday 3 April 2009 To Friday 17 April 2009
UK replay dial-in:	0845 245 5205
International replay dial-in:	[phone]
USA & Canada replay dial-In:	1866 247 4222
Quote reference number:	92122886#

 

END

 

 

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