Electrocomponents PLC Electrocomponents Plc Trading Statement (8447J)
July 03 2017 - 2:00AM
UK Regulatory
TIDMECM
RNS Number : 8447J
Electrocomponents PLC
03 July 2017
Electrocomponents plc today issues a trading update for its
first quarter ended 30 June 2017
Sales growth(1)
Regional Hub Quarter to Quarter to
June 2017 March 2017
Northern Europe 10% 5%
Southern Europe 11% 5%
Central Europe 11% 6%
------------------- ---------------- -------------------
Total Europe 11% 5%
Asia & Emerging
Markets 18% 9%
The Americas 16% 16%
Group 13% 8%
We have made a strong start to the year to March 2018, with an
acceleration in revenue growth and improved profits despite
continued investment to drive future growth.
Q1 underlying revenue growth accelerated to 13% with all regions
seeing double-digit underlying revenue growth. During Q1 we have
seen a three percentage point headwind from fewer trading days, as
such constant currency revenue growth, not adjusted for trading
days, was closer to 10%.
o Our end markets continued to be strong and our focus on
improved customer service, online experience and sales
effectiveness has driven market share gains in the quarter.
o The acceleration in Q1 revenue growth has been driven by an
increase in growth in Europe and Asia. Asia and the Americas in
particular, have seen strong double-digit growth against a period
of weak trading comparatives. Trading comparatives for all our
regions will toughen as the year progresses.
o eCommerce, which represents around 60% of revenues, saw
revenue growth of around 13% in Q1, with growth accelerating on the
back of the step-up in investment in digital marketing initiated in
H2 2017.
o RS Pro, our own-brand business, which accounts for around 12%
of revenues saw revenue growth of around 8% in Q1.
-- We expect the gross margin(2) to be broadly stable in Q1 on
the previous year and at a similar level to that seen in H1 2017,
with foreign exchange benefits offsetting both an unfavourable
product and geographic mix during the period. The geographic mix
relates to faster growth in our lower gross margin hub in the
Americas and product mix reflects faster growth in lower gross
margin product categories such as semiconductors during the
period.
-- We continue to focus on increasing efficiency so we can
convert a higher proportion of gross profit into operating profit.
We remain on track to deliver the GBP5 million of additional net
annualised cost savings in the current financial year, giving a
cumulative total of GBP30 million of annualised savings by March
2018. However, during the first half of 2018 we will see an
annualisation of the increase in investment in areas such as
digital, talent and RS Pro that was made during the second half of
2017 to drive faster growth. We are also seeing higher variable and
incentive costs associated with faster revenue growth.
-- We remain focused on driving cash flow and we have a strong
balance sheet. On 30(th) June 2017 the maturing $85m US Private
Placement was repaid in full.
-- We are consolidating our Oxford based head office and our
London based digital operations into a single head office and
digital hub in London Kings Cross. This will lead to an exceptional
charge of around GBP4 million in the first half of the year to
March 2018.
Lindsley Ruth, Chief Executive Officer, commented
"We have had an encouraging first quarter and while it remains
early days, it is pleasing to see our focus on the customer,
improved execution and increased sales effectiveness driving strong
results across the business. Whilst the external macro environment
remains uncertain, we have a strong platform and concrete
transformation initiatives and we remain confident of delivering
good progress in the current financial year."
Enquiries:
David Egan Group Finance Director 01865 204000
Polly Elvin Investor Relations and Corporate PR 01865 207427
Martin Robinson/David Allchurch Tulchan Communications 020 7353 4200
Notes:
1. Revenue growth rates, unless otherwise stated, are adjusted
for trading days and currency movements ("underlying revenue
growth").
2. As we disclosed in the Annual Report, gross margin has been
re-presented for a change in the classification of the write-down
of inventory to net realisable value to cost of sales from
distribution and market expenses (see note 1 on page 88 of our 2017
Annual Report for more details).
3. Our profits remain sensitive to movements in exchange rates
on translation of overseas profits. At the time of our preliminary
results on May 23 the Euro spot rate was 1.16 and US dollar spot
rate was 1.30, in the first quarter our average exchange rates were
1.16 and 1.28. Every 1 cent movement in the Euro will have a
GBP1.0m impact on profits. Every 1 cent movement in US $ will have
a GBP0.3m impact on profits.
Electrocomponents plc - Conference Call Dial
in Instructions
Date: Monday 3(rd) July
UK Time: 08.00h call
Telephone number: +44 (0) 1452 55 55 66
PIN: 48934706
Chairman: Lindsley Ruth
Electrocomponents plc - Replay Dial in Instructions
(available until 10 July 2017)
Telephone number: +44 (0) 1452 55 00 00
PIN: 48934706
This information is provided by RNS
The company news service from the London Stock Exchange
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