Premier Farnell's (PLF) first-half reported figures were flattered by a one-off restructuring charge in the comparable period. Strip out the exceptionals and the numbers reveal still challenging trading conditions, with adjusted operating profits down 9 per cent to £47.5m. Without the luxury of a forward order book, Premier Farnell's fortunes track activity in its end markets and they remain mixed.
There was better news from continental Europe, where a more stable economic backdrop helped drive a 4 per cent sales increase. Asia Pacific also did well, with China and India delivering growth of 19 per cent and 20 per cent, respectively. But these bright spots were offset by challenging UK conditions as public spending cuts curtailed activity and continued caution among North American customers was compounded by a hit from reduced US government spending.
Chief executive Laurence Bain says the outlook continues to be characterised by limited visibility and mixed end-market conditions. But he believes that the company's investment in inventory during the first half and other self-help measures, such as marketing initiatives in the UK and investment in e-commerce, should enable the company to grow customer numbers. He also notes that the company's Raspberry Pi product, a single-board computer, looks set to see good Christmas demand.
Broker Jefferies has downgraded its full-year EPS estimate by 8 per cent to 14.8p (from 14.6p for 2013) to reflect higher tax guidance, with 17.2p expected in 2015.
PREMIER FARNELL (PFL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 237p | MARKET VALUE: | £880m | |
| TOUCH: | 236p-237p | 12-MONTH HIGH: | 241p | LOW: 165p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 22p* | NET DEBT: | 307% | |
| Half-year to 4 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 479 | 31.8 | 6.20 | 4.40 |
| 2013 | 498 | 38.1 | 7.10 | 4.40 |
| % change | +4 | +20 | +15 | – |
Ex-div: 25 Sep Payment: 24 Oct *Includes intangible assets of £69.5m, or 19p a share | ||||
