The good news from Electrocomponents (ECM) wasn't so much the results themselves, but the fact that an improved sales trend at the end of the first half has carried on into the second half. During the period, underlying sales growth reached a paltry 1 per cent but, in the last month of the half, it rose to 4 per cent and has remained at 4 per cent during October. That pick up suggests that economic recovery is flowing through into electronic parts demand. "PMIs [purchasing managers' indices] have improved and that usually feeds through to us after six months," says chief executive Ian Mason.
But predicting whether that more positive trend will last is tricky as Electrocomponents has no forward order book - it simply distributes the electronic parts when customers need them, so it always suffers from limited visibility. In the meantime, the company is focusing on self-help measures in order to makes the best of whatever end-market growth it does experience. That strategy will see Electrocomponents further develop its e-commerce capabilities (e-commerce sales already represent 57 per cent of the total) and globalise its offering in its continued hunt for market share.
Underlying first-half profit before tax rose 14 per cent to £44.6m with underlying EPS up 16 per cent to 7.2p. Broker Canaccord Genuity expects full-year EPS of 16.1p (14.5p in 2013).
ELECTROCOMPONENTS (ECM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 297.6p | MARKET VALUE: | £1.31bn | |
| TOUCH: | 297p-298p | 12-MONTH HIGH: | 299p | LOW: 202p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 82p* | NET DEBT: | 41% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 607 | 36.7 | 5.80 | 5.00 |
| 2013 | 635 | 44.6 | 7.20 | 5.00 |
| % change | +5 | +22 | +24 | |
Ex-div: 4 Dec Payment: 10 Jan *Includes intangible assets of £218m, or 50p a share | ||||
