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Momentum effect boosts Premier Farnell

RESULTS: Premier Farnell is heading in the right direction, driven by improving end markets and self-help measures
March 20, 2014

Electronic components distributor Premier Farnell's (PFL) results hardly set the world alight, but there were some encouraging noises. Sales per day rose 2.6 per cent last year, but accelerated in the second half by 4.4 per cent. And chief executive Laurence Bain says that momentum has been maintained in recent weeks. "The current financial year has started as the last one ended, we are happy with the momentum," he told the IC, adding that strengthening economic indicators are feeding through to demand for the company's parts.

IC TIP: Buy at 225p

As a distributor, Premier is heavily influenced by the economic cycle and there is no long-term order book to cushion swings in sentiment. But the company is working hard to improve its business model, which largely means being at the forefront of technological advances in its end markets. The acquisition of US-based analog, radio and wireless specialist AVID Technologies for $13m (£7.9m) announced alongside these results should help. Other big pushes include focusing on the high-growth markets of Asia and upgrading websites both there and in Europe.

Deutsche Bank expects adjusted pre-tax profit of £82m this year, giving adjusted earnings per share of 15.2p (from £76m and 14.3p in 2014).

PREMIER FARNELL (PFL)

ORD PRICE:225pMARKET VALUE:£835m
TOUCH:225-226p12-MONTH HIGH:248pLOW: 189p
DIVIDEND YIELD:4.6%PE RATIO:16
NET ASSET VALUE:23p*NET DEBT:267%

Year to 2 FebTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20107955410.49.4
20119919318.310.4
201297310521.210.4
20139526913.310.4
20149687514.010.4
% change+2+8+5 -

Ex-div: 28 May

Payment: 25 Jun

*Includes intangible assets of £71m, or a 19p share