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Electrocomponents restructuring drive shows early promise

Investors overlooked a disappointing performance as the electronics distributor's turnaround plans started to gain traction

Traditional catalogue distributors such as Electrocomponents (ECM) have struggled to remain relevant in today's digital-led world. A 4 per cent drop in adjusted operating profits to £82m suggests the transition isn't getting any easier, as the company fell victim to a combination of increased discounting, higher sales of low-margin semiconductors, unfavourable currency fluctuations, manufacturing weakness and the disruptive restructuring of its Asian operations.

IC TIP: Hold at 269p

Disappointed chief Lindsley Ruth demands more in the years ahead, and a 4 per cent rise in the share price indicates that investors are confident this can be achieved. Driving this optimism was the implementation of the group's performance improvement plan in November, which led to a much better second-half performance.

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