At first glance, 7 per cent full-year growth in both sales and profits at distributor Electrocomponents doesn’t look bad. But growth slowed sharply towards the end of the period - fourth quarter sales rose just 1 per cent overall. And that trend has continued since the period end, leaving few catalysts to drive the shares.
Indeed, in the first seven weeks of the new financial year international sales slipped 2 per cent overall - sales in both north America and Asia Pacific fell 3 per cent and continental European sales dropped 1 per cent. Only the UK registered growth, where sales rose 4 per cent. That leaves management’s target of growing international sales by 7-10 per cent a year looking optimistic in the current tough economic climate.
But the management thinks Electrocomponents is well placed to consolidate a fragmented overseas market and estimates the value of the available market for the group to be worth around £30bn globally. Moreover, the company has been successfully growing its e-commerce offering – sales here rose 18 per cent in the year and now generate 54 per cent of group revenue, up from 49 per cent a year earlier.
Broker Panmure Gordon, however, has cut its forecasts by around 7 per cent and now expects pre-tax profit for 2013 of £116m, giving EPS of 18.4p.
ELECTROCOMPONENTS (ECM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 200p | MARKET VALUE: | £874m | |
| TOUCH: | 199-200p | 12-MONTH HIGH: | 298p | LOW: 172p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 84p* | NET DEBT: | 42% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 0.93 | 95.4 | 14.7 | 18.4 |
| 2009 | 0.98 | 96.5 | 15.2 | 11.0 |
| 2010 | 0.97 | 76.0 | 12.1 | 11.0 |
| 2011 | 1.18 | 114 | 18.0 | 11.0 |
| 2012 | 1.27 | 122 | 19.5 | 11.5 |
| % change | +7 | +7 | +8 | +5 |
Ex-div:20 Jun Payment:20 Jul *Includes intangible assets of £204m, or 47p per share | ||||
