Can it get any worse for Premier Farnell (PFL)? Less than two months after issuing a stinging profit warning, the distributor of electrical products downgraded guidance again as its footprint in key markets continued to weaken. That hammer blow, together with a 41 per cent cut to the half-year dividend, sent the group's shares tumbling a further 16 per cent on results day.
Plenty of work must be done to regain a competitive advantage in core UK and US markets, says interim chief Mark Whiteling. While Premier's domestic operations have been hit by a number of North American rivals entering the market, Mr Whiteling admits that the group's product offering in the US hasn't always reflected its industrial customers' requirements.
Those issues, and soaring sales of the recently launched Raspberry PI, meant that adjusted operating profit fell a tenth. As these mini-computers were originally unveiled as non-profit products for school children they command much lower margins.
All eyes are now on the strategic review's next findings. So far, Premier has decided to sell fire-fighting kit manufacturer Akron Brass and exit unprofitable operations in Brazil at a cost of £1m. Plenty more drastic decisions are expected before December. Broker Stifel forecasts adjusted EPS of 13.1p for the full year, down from 13.9p in the year to January 2015.
| PREMIER FARNELL (PFL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 114p | MARKET VALUE: | £424m | |
| TOUCH: | 114-114.2p | 12-MONTH HIGH: | 205p | LOW: 114p |
| DIVIDEND YIELD: | 7.5% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 22p* | NET DEBT: | 288%** | |
| Half-year to 2 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 479 | 36.4 | 6.8 | 4.4 |
| 2015 | 499 | 30.6 | 5.8 | 2.6 |
| % change | +4 | -16 | -15 | -41 |
Ex-div: 24 Sep Payment: 22 Oct *Includes intangible assets of £86m, or 23p a share **Includes preference shares | ||||
