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Premier Farnell: Results For Q1 Of Financial Year Ending Feb 2013
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Thursday, June 14, 2012:
Sales per day maintained at stable levels since Q3 last year; continued focus on margin and costs
Financial highlights:
Continued delivery of industry leading return on sales with first quarter at 10.8% (2011/12: 11.3%), and underlying operating profit for the quarter of £26.0m (2011/12: £28.5m).
Stability in sales per day (SPD) maintained for the third consecutive quarter, despite contracting markets, resulting in a year on year decline of 5.0% in the quarter against strong comparator growth of 8.3% last year.
Both Europe and Asia Pacific showed strong sequential growth of 2.1% and 8.5%, respectively with Asia Pacific returning to year on year growth. North America was 2.7% lower, sequentially, as we continued our strategic transformation away from commodity MRO.
Following investment in our high service proposition, first quarter gross margin increased by 0.7% on the fourth quarter to 39.8% (2011/12: 40.7%) and above our long term average.
Overhead costs for the first quarter were 29.0% of sales (2011/12: 29.4%) representing a year on year reduction of £4.3m, with focus on cost efficiency through the remainder of the year.
Operating cash flow conversion in the quarter was strong at 116.5%(e) (2011/12: 61.1%) giving free cash flow of £21.8m for the quarter reducing net debt to £212.3m (Q4 2011/12: £237.1m).
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Strategic highlights
Global MDD eCommerce penetration increased by 2.4 percentage points year on year to 56.1%.
Continued progress as a digital enterprise, with 2.7m visits in the quarter to our element14 community as it played an important role in the global launch of Raspberry Pi which will add in excess of 60,000 new customers for the second quarter.
Continued growth in our active customer base of 2.1% in the first quarter.
International growth markets contributed 23.2% of total sales within which first quarter sales to our emerging markets increased by 6.5% year on year giving three year compound growth of 48.0%.
Following the launch in Q3 of version six of CadSoft EAGLE, our design engineering software, CadSoft product sales increased by 95.4% year on year in the first quarter.
Our new multi-lingual, pan-European outbound telesales call centre in Krakow, Poland, is on track for a phased launch following its opening on 28th May. As previously announced, £7.5m of exceptional costs, principally in relation to this project, were incurred in the quarter and will be recovered over a 3-4 year payback period.
On 24th May the Group announced the resignation of Harriet Green after six years as Chief Executive Officer and the appointment of Laurence Bain. Laurence joined the Company in 2002 and has been Chief Operating Officer since July 2002. He has played a key role in the development and delivery of the Group’s strategy.|
Commenting on the results, Laurence Bain, Group Chief Executive, said:
‘’Global quarterly sales per day have been maintained at a stable level since the decline in the global electronics and technology markets that impacted us in June last year. In the first quarter we saw sequential growth in both Europe and Asia Pacific and a reduction in the Americas as that business continues its progression from commodity to strategic MRO and EDE. Although at this stage of the cycle EDE markets remain challenging, MRO sales per day continued to progress on a year on year basis.
Sales in May were stable against Q1 resulting in an improved year on year performance of -2.4%. We continue to manage costs carefully and maintain gross margin stability whilst investing in support of our strategy and our people. As comparators become easier from the middle of the year and with the benefit of a 53rd week we expect growth to return in the second half. However as we have limited forward visibility and in light of the economic outlook we remain cautious.
With continued focus on providing great service to the engineering community, our multichannel strategy, led by the web and growth in emerging markets, I believe that the Group will go from strength to strength.’’
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