Electrocomponents (ECM) reported a 7 per cent increase in underlying pre-tax profit to £101m - a result broker N+1 Singer described as "bang in line with expectations". And yet the shares sank 4 per cent. The reason for the lukewarm reaction lies close to home. UK sales fell 2 per cent as improving manufacturing surveys - usually a key bellwether - failed to translate into a meaningful pick-up in demand.
Management told us that competitors are seeing similarly lacklustre trading, which suggests the weakness is, at least in part, a macro issue. Finance director Simon Boddie wonders if the "UK economic recovery that is being talked about is more in construction than manufacturing". But he also says management changes have been made to address company-specific issues.
Trading outside the UK, which accounts for over 70 per cent of group revenues, is healthier. Sales there rose 4 per cent, and Mr Boddie says there's a lot to go for as Electrocomponents mops up share in a fragmented market. The e-commerce push is also going well, with almost 60 per cent of sales made through this channel.
Broker N+1 Singer expects adjusted pre-tax profit of £109m this year, giving EPS of 17.4p (from 16.3p).
| ELECTROCOMPONENTS (ECM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 279p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 278-279p | 12-MONTH HIGH: | 307p | LOW: 233p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 83p* | NET DEBT: | 39% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.0 | 76 | 12.1 | 11.00 |
| 2011 | 1.2 | 114 | 18.0 | 11.00 |
| 2012 | 1.3 | 122 | 19.5 | 11.5 |
| 2013 | 1.2 | 87 | 13.6 | 11.75 |
| 2014 | 1.3 | 101 | 16.3 | 11.75 |
| % change | +3 | +17 | +20 | |
Ex-div: 25 Jun Payment: 29 Jul *Includes intangible assets of £220m, or 50p a share | ||||
