Trading Statement

RNS Number : 4278O

Electrocomponents PLC

08 October 2021

 

8 October 2021, 7.00 am

Electrocomponents plc today issues a trading update for its first half ended 30 September 2021 ahead of publishing half-year results on 4 November 2021  

STRONG PERFORMANCE AHEAD OF OUR EXPECTATIONS

LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "Our trading has remained very strong across all regions as we have worked closely with suppliers to ensure our product availability, delivery and service offer remain robust, which has driven further growth in both customers and average order value. This has led to our financial performance to date being stronger than expected. We remain cautious about the external challenges and the resulting impact this could have on industry supply and customer demand, but our differentiated offer means we are well placed strategically to continue to gain market share and take advantage of the significant growth opportunities we see."

	Like-for-like revenue growth2
	Versus 2020/21 (one year)				Versus 2019/20 (two year)
Region	Q1 to June 2021	Q2 to Sept 2021	H1 to Sept 2021		H1 to Sept 2021
EMEA	37%	22%	29%		19%
Americas	40%	35%	37%		27%
Asia Pacific	31%	31%	31%		29%
Group	37%	26%	31%		22%

Revenue performance remains strong as we continue to manage our product availability proactively

· One-year like-for-like H1 revenue growth was 31%, with acquisitions contributing a further 7%, trading days 1% and foreign exchange a 6% headwind to deliver total revenue growth of 33%.

· Two year like-for-like H1 revenue growth was 22%.

· Our electronics product range, which is c. 22% of Group revenue, grew two-year like-for-like H1 revenue by 33%.

· Within EMEA, revenue performance was broadly similar across our main markets, benefiting from an improved operational model and focus. The UK suffered slightly over the COVID-19 'pingdemic' but has since recovered. Germany is gaining momentum driven by leadership team changes and refocused sales processes. Our distribution centre expansion is in early stage commissioning and will bring us closer to our European customers.

· Americas continues to perform very strongly due to the significant investment in our people and culture, digital and marketing proposition, and a wider product offer resulting from our distribution centre extension.

· Asia Pacific growth reflects a strengthened management team, change in culture and refocused sales processes which are driving strong market share gains in both the industrial and electronics markets.

· Integration of our acquisitions is progressing as planned, delivering cross-Group benefits and new contract wins.

· Our own-brand, RS PRO, grew two-year like-for-like H1 revenue by 28% despite having a limited electronics range.

· Web two-year like-for-like H1 revenue increased by 26%, with like-for-like digital participation of 63%.

Operating efficiency improved across all regions although cost pressures remain

· Improvements in gross margin delivered through product management work is being partly offset by regional and product mix dilution and ongoing cost pressures from inbound freight inflation.  

· We continue to experience higher outbound freight charges, costs to serve and labour inflation which are showing no signs of abating.

· We increased operational investment to strengthen our expertise, technological capabilities and product and service capacity to improve the efficiency of our operating basics and support future growth.

· We are on track to improve operational efficiencies and deliver our Destination 2025 target of a 30% adjusted operating profit conversion and mid-teens adjusted operating profit margin.

· Our cash generation and conversion remain strong, supporting our organic and inorganic growth opportunities.

Our financial performance to date has been stronger than expected

· Looking forward, we face much tougher comparatives and a number of external challenges, including supply chain shortages, which are affecting industrial production and increasing cost pressures. Hence, we expect our full year profit to be more weighted to the first half than in previous years.

· However, with the strong performance in the first half, and notwithstanding the uncertain trading environment, we now anticipate full year revenue growth and adjusted operating profit margin to be slightly ahead of the guidance provided with our Q1 update.³

Interims announcement

We are scheduled to announce our half year results including an update on our Environmental, Social and Governance plan on 4 November 2021.

LEI: 549300KVXDURRKVWR37

Enquiries:
David Egan	Chief Financial Officer	020 7239 8400
Lucy Sharma	VP Investor Relations	020 7239 8427
Martin Robinson / Olivia Peters	Tulchan Communications	020 7353 4200

Notes:

1.  Consensus for the year ending 31 March 2022 is adjusted profit before tax of £261.2 million within a range of £251.2 million to £274.2 million (source: Electrocomponents.com/investors/analyst-coverage).

2.  Like-for-like revenue growth is growth in revenue adjusted to eliminate the impact of acquisitions and the effects of 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. 2020/21 is converted at 2021/22 average exchange rates for the period.   

3.  The guidance given at our Q1 trading update, released on 8 July 2021, was: "...to deliver low double-digit to mid-teens like-for-like revenue growth for the full year, supporting a return to an adjusted operating profit margin around 2019/20 levels".

4.  Our profit remains sensitive to movements in exchange rates on translation of overseas profits. Average exchange rates for the year ended 31 March 2021 for euro and US$ respectively were 1.121 and $1.308 respectively. Every 1 cent movement in the euro has a circa £1.5 million impact on annual adjusted profit before tax. Every 1 cent movement in the US $ has a circa £0.4 million impact on annual adjusted profit before tax.  

5.  We expect to see a positive impact of around £9 million on revenue from additional trading days in 2021/22 compared to 2020/21.   

Conference call details  

There will be a conference call for analysts and investors today at 8.00am BST via an audio conference call. A replay of the conference call will be provided shortly after the event via the investor relations page of the Electrocomponents website: https://www.electrocomponents.com/investors  

Pre-registration link  

If possible, please pre-register for this call to join digitally (without an operator), via the following link: https://www.incommglobalevents.com/registration/client/8756/electrocomponents%E2%80%99-trading-update/  

Conference call timing  

Date: Friday, 8 October 2021

Time: 8.00am BST

Participant dial-in via operator  

United Kingdom (local): 020 3936 2999

All other locations: [phone]

Access code: 119057 - Participants will be greeted by an operator who will register their details.

Online replay  

Access details: A recording will be available until Friday, 15 October 2021

Click on the following link and enter the access code: 602399 https://www.incommglobalevents.com/replay/6800/electrocomponents-h1-2022-trading-update/  

Telephone replay  

Access details: A recording will be available until Friday, 15 October 2021

United Kingdom: 020 3936 3001

USA: 1 845 709 8569

All other locations: [phone]

Access Code: 602399

 

END

 

 

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