After a difficult first-half. Electrocomponents' full-year figures pointed towards sales picking-up this year. The electronics distributor built on the momentum from an improved fourth quarter to register 23 per cent overall sales growth in the first seven weeks of the new financial year.
Still, the outcome in the year to end-March wasn't particularly impressive - underlying UK sales fell 5.6 per cent, while the international business saw sales fall 4.7 per cent. But this does mask a turnaround towards the end of the year and the UK business, which generates a third of revenues, actually grew sales 9 per cent in the fourth quarter. The company has also started bidding for higher volume but lower margin business, which explains the fall in gross margin from 49.5 per cent to 48.1 per cent. Although margins were partly protected by £18m of savings made during the year.
Finance director Simon Boddie said business investment in IT, especially for e-commerce, had started to recover. Moreover, he expects the group's dividend to start rising again when it's 1.5 times covered by earnings - the current cover is 1.1 times. Although "this won't be in the next few months," he warned
Broker KBC Peel Hunt forecasts pre-tax profits for 2011 of £86.7m, with EPS of 13.8p (2010:£76m/EPS 12.1p.)
ELECTROCOMPONENTS (ECM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 219p | MARKET VALUE: | £ 954m | |
| TOUCH: | 219-220p | 12-MONTH HIGH: | 245p | LOW: 134p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 57% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 829 | 65.1 | 10.0 | 18.4 |
| 2007 | 878 | 87.2 | 13.2 | 18.4 |
| 2008 | 925 | 95.4 | 14.7 | 18.4 |
| 2009 | 975 | 96.5 | 15.2 | 11.0 |
| 2010 | 973 | 76.0 | 12.1 | 11.0 |
| % change | -0 | -21 | -20 | - |
Ex-div:23 Jun Payment:23 Jul *Includes intangible assets of £216m, or 50p a share | ||||
