As a distributor, Electrocomponents' (ECM) performance should be a distributor whose performance is intertwined with aggregate demand within the economy. But if, as some economists believe, we are already on the down-leg of the cycle, then it certainly is not apparent in full-year figures, which show like-for-like revenue growth of 8.3 per cent and a 110 basis point rise in the adjusted operating margin.
The positive outcome was partly due to market share gains in the Americas and Europe, the Middle East and Africa (EMEA), but acquisitions have played a part. A significant proportion of reported top-line growth was attributable to the integration of IESA, acquired last May, which contributed £27.3m to revenue, as well as £6.7m of adjusted operating profit. Management notes that IESA's adjusted operating profit margin of 24.5 per cent was accretive to the group percentage. That is not a regular feature of acquired assets, although perhaps not that surprising given IESA's business model is largely predicated on maximising returns for others.
The impact of acquisitions on the balance sheet is not clear, but a 41 per cent rise in receivables was complemented by a 37 per cent increase in trade payables. Meanwhile, the adjusted operating cash flow conversion rate came in at 64.2 per cent against 83.1 per cent a year earlier. So still, some housekeeping to do.
Numis anticipates adjusted pre-tax profits of £236.5m for the March 2020 year-end, leading to EPS of 40.6p, rising to £260m and 44.7p in FY2021.
| ELECTROCOMPONENTS (ECM) | ||||
| ORD PRICE: | 619p | MARKET VALUE: | £2.75bn | |
| TOUCH: | 616.8-622p | 12-MONTH HIGH: | 779p | LOW: 478p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 133p* | NET DEBT: | 21% | |
| Year to 31 March | Turnover (£bn) | Pre-tax profit (£m) | Earnings share (p) | Dividend per share (p) |
| 2015 | 1.27 | 96.1 | 16.0 | 11.75 |
| 2016 | 1.29 | 34.9 | 5.0 | 11.75 |
| 2017 | 1.51 | 127 | 20.9 | 12.30 |
| 2018 | 1.71 | 169 | 33.9 | 13.25 |
| 2019 | 1.88 | 195 | 33.4 | 14.80 |
| % change | +10 | +16 | -1 | +12 |
| Ex-div: | 13 Jun | |||
| Payment: | 25 Jul | |||
| *Includes intangible assets of £321m, or 72p a share | ||||
