Trading update

RNS Number : 7301B

Electrocomponents PLC

06 April 2017

 

Electrocomponents plc today issues a trading update for the year ended 31 March 2017, ahead of publishing full-year results on 23 May 2017.

	Revenue growth(1)
Region	Quarter to Mar 2017	Year to Mar 2017
Northern Europe	5%	5%
Southern Europe	5%	4%
Central Europe	6%	2%
Total Europe	5%	4%
Asia and Emerging Markets	9%	4%
North America	16%	7%
Group	8%	5%

We have continued to make strong progress in the final quarter of the year.  As a consequence we expect our results for the full year ended 31 March 2017 to be ahead of our previous expectations, with headline profit before tax ahead of the current market consensus range⁽²⁾.

·     Q4 revenue growth accelerated to 8% leading to revenue growth of 5% for the full year.

o  Our end markets remain strong and the business is executing well, as we continue to improve our go-to-market approach and sales effectiveness.  Revenues in the quarter have also benefitted from a more favourable competitive environment in the quarter.

o  The acceleration in Q4 revenue growth has been driven by a strong recovery in growth in North America and Asia Pacific, and continued robust growth in Europe.

o  RS Pro, our own-brand business, which accounts for around 12% of revenues saw revenue growth of around 5% in Q4.  

o  eCommerce, which represents around 60% of revenues saw revenue growth of around 8% in Q4, broadly in line with the Group growth rate.

·     We expect a similar year-on-year percentage point improvement in the full-year gross margin to that seen in the first-half gross margin. During the final quarter our own actions on price and discount discipline and foreign exchange benefits have offset an unfavourable geographic mix, which relates to faster growth in our lower gross margin North American hub.

·     We continue to make good progress on our cost initiatives and are on track to deliver £18 million of net savings in the year to March 2017. However, strong revenue momentum and share price appreciation will lead to higher employee-related incentive costs in the year.

·     As we look into 2018, we are also using the strong growth momentum as an opportunity to invest in talent and innovation to drive faster growth in the business in the medium term.

·     FY 2017 revenue and profits have seen a significant benefit from foreign exchange⁽³⁾ and additional trading days⁽⁴⁾. As previously guided, in FY 2018 we expect to see an adverse impact on revenues and profits from fewer trading days compared with FY 2017⁽⁴⁾.

Enquiries:

David Egan	Group Finance Director	01865 204000
Polly Elvin	Investor Relations and Corporate PR	01865 207427
David Allchurch / Martin Robinson	Tulchan Communications	020 7353 4200

Notes:

(1)   Revenue growth rates, unless otherwise stated, are adjusted for trading days and currency movements ("underlying sales growth").

(2)   The market consensus range for headline PBT for the year to March 2017 is £122.3 million to £124.2 million. This range only includes estimates from analysts that have updated forecasts since our latest trading update on 10 February 2017.

(3)   Our profits remain sensitive to movements in exchange rates on translation of overseas profits. Positive currency movements increased H1 profit before tax by around £7 million and we expect them to increase full-year profit before tax by around £18 million. Every 1 cent movement in the Euro will have a £1.0 million impact on profits. Every 1 cent movement in US $ will have a £0.3 million impact on profits.

(4)   During the year to March 2017 we expect to see around £10 million benefit to revenues from additional trading days compared with FY 2016. In the year to March 2018 we expect to see an adverse impact of around £20 million on revenues from fewer trading days compared with the year to March 2017.

Electrocomponents plc - Conference Call Dial in Instructions
Date:	Thursday 6 April
UK Time:	08.00h call
Telephone number:	[phone]
PIN:	97347958
Chairman:	Lindsley Ruth
Electrocomponents plc - Replay Dial in Instructions (available until 13 April 2017 at 10.30h)
Telephone number:	[phone]
PIN:	97347958

LEI: 549300KVXDURRKVW7R37

 

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