Growth slows at Premier Farnell

Premier Farnell was never going to replicate last year’s stellar growth driven, as it was, by cost-cutting and post-recession restocking. The supplier of industrial components managed to increase sales by just 1.4 per cent during the second quarter, way short of its 6-8 per cent target, and they actually fell by 2 per cent in August.

There had been some warning of this. In July, it said the economic slowdown meant it would take longer to work through the inventories built up after the Japanese earthquake. First-half underlying operating profit grew only 7 per cent to £56m on underlying revenue that rose 4.8 per cent, and the outlook for the second half is described as “unclear”. However, cost-cutting, more web business and 14,000 new higher-margin products for the North American electrical design engineers (EDE) market offset weaker sales, pushing profits there up 19 per cent. Otherwise, quarterly growth slowed to 6.8 per cent in the UK and to 5.3 per cent in continental Europe - sales fell 2 per cent in Asia. An extra £15m of cost savings should help the second half.

Deutsche Bank has trimmed its full-year EPS forecast for 2012 by 1.8 per cent to 16.9p and is looking for adjusted pre-tax profit of £88m (2011: 18p/£93m).

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