Electronics parts distributor Electrocomponents (ECM) gave a hint of the difficulties it's been facing in the distribution market when it warned on profits early last month, so a 30 per cent slump in adjusted pre-tax profits was expected. Of more relevance is the current state of trading and, on that score, the latest trading update is hardly encouraging.
Since the start of October, sales have been flat overall, but in the international business, which accounts for 70 per cent of turnover, they declined by 2 per cent. Continental Europe posted 1 per cent growth, but sales in France were noticeably weaker and the 6 per cent sales decline in North America was eye-catching, although there was an impact from hurricane Sandy at the end of the month. In Asia Pacific, sales declined 1 per cent as Chinese buyers shunned Japanese goods. Moreover, gross margins have been falling across all regions due to customer discounting and sales of lower-margin products. Finance director Simon Boddie expects second-half results to be helped by cost savings of £3m, which annualised will run at £6m to £8m as around 140 jobs go.
Broker Panmure Gordon forecast full-year adjusted pre-tax profits of £106m and EPS of 16.8p (from £122.3m and 19.5p in 2012).
ELECTROCOMPONENTS (ECM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 208p | MARKET VALUE: | £911m | |
| TOUCH: | 207-208p | 12-MONTH HIGH: | 267p | LOW: 186p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 82p* | NET DEBT: | 44% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 627 | 59.4 | 9.40 | 5.00 |
| 2012 | 607 | 39.0 | 6.20 | 5.00 |
| % change | -3 | -34 | -34 | - |
Ex-div: 5 Dec Payment: 11 Jan Includes intangible assets of £211m, 48p a share | ||||
