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).
|PREMIER FARNELL (PFL)|
|ORD PRICE:||161p||MARKET VALUE:||£595m|
|TOUCH:||161-162p||12-MONTH HIGH:||313p||Low: 159p|
|DIVIDEND YIELD:||6.5%||PE RATIO:||7|
|NET ASSET VALUE:||16p*||NET DEBT:||428%|
|Half-year to 31 Jul||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 21 Sep
Payment: 19 Oct
*Includes intangible assets of £62.5m, or 17p per share
Premier’s shares have almost halved since May, meaning a forward PE ratio of 10. This is justified given the limited forward visibility and weaker economic growth - and despite the attractive yield. Fairly priced.
Last IC view: Fairly priced, 281p, 17 March 2011