Electrocomponents (ECM) pre-tax profits were hit by a £10.4m write-down of assets in connection with British Steel, which went into liquidation in May. This included £7.2m for outstanding receivables relating to transactions with the steel manufacturer before its closure, and £3.2m against inventory recovered from the company. Electrocomponents' shares lost over a tenth of their value following the release of these half-year results.
Yet a disappointing period for the distributor was not limited to an external crisis that was outside management control – even on an adjusted basis, like-for-like pre-tax profits dropped 0.4 per cent. Admittedly, Electrocomponents made market share gains with its industrial arm, while the RS Pro business – the group’s own brand of more than 58,000 industrial products and electronic components – outperformed growth expectations, with a like-for-like revenue lift of 9.7 per cent (albeit from a low base). Yet these were “largely offset by ongoing softness in electronics”, the company observed.
The duties of chief executive Lindsley Ruth have been temporarily passed over to chief financial officer David Egan, while the former recovers from illness. Mr Ruth is expected to return in the new year.
Peel Hunt cut its forecasts for Electrocomponents’ full-year 2020 pre-tax profits and earnings per share, from £222.6m and 37.4p, respectively, to £219m and 36.8p.
| ELECTROCOMPONENTS (ECM) | ||||
| ORD PRICE: | 616p | MARKET VALUE: | £2.75bn | |
| TOUCH: | 615-616p | 12-MONTH HIGH: | 730p | LOW: 478p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 148p* | NET DEBT: | 24%** | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 912 | 93 | 15.9 | 5.30 |
| 2019 | 979 | 89 | 15.2 | 5.90 |
| % change | +7 | -4 | -4 | +11 |
| Ex-div: | 28 Nov | |||
| Payment: | 8 Jan | |||
| *Includes intangible assets of £333m, or 75p a share **Excludes lease liabilities of £59.6m | ||||
