Electrocomponents takes reduced hit on British Steel

Covid-19 has already taken a chunk out of the current year’s earnings, however. The industrial products group saw like-for-like revenue fall 14 per cent in the eight weeks following 31 March. Worst-hit was its Europe, Middle East and Africa (EMEA) division, which saw an 18-per-cent drop. In the 2020 financial year, the EMEA region accounted for 64 per cent of the group’s overall sales. 

In light of current events, Electrocomponents has deferred a decision on the final dividend until later in the year, although it flagged the possibility of declaring an extra interim payout for 2020. Chief executive Lindsley Ruth said the group has a robust balance sheet to help it face the challenge ahead. Excluding lease liabilities, net debt edged up 9 per cent in the 12 months to 31 March, to £134m, and it has access to £189m of undrawn borrowing facilities if needed. 

The negative for the year was writing off £7.3m in receivables owed by British Steel at the time of its collapse. This is less than the £10.4m write-down at the half-year, however, as some inventory is “recoverable” following Jingye’s buyout that completed in March. 

Higher spending on distribution centres in the US and Germany as part of the ‘Destination 2025’ strategy did cut into free cash flow, with capex up almost 50 per cent to £74.7m.