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Electronics Production | November 15, 2010

RS with 19 account wins in the UK and Europe in 1H/2010

UK-based distributor Electrocomponents reports profit before tax fo GBP 50.5 million for the 1H of fiscal 2010 (ending September 30, 2010).

Financial Highlights

* Strong underlying sales growth of 24%, with all regions in double digit growth.
* Gross margin stable through the first half.
* Significant cost leverage with operating costs reducing by 5% points of sales to 37%.
* More than doubling of profit before tax to GBP 50.5m.
* Return on sales increasing by 3.4% points to 9.5%.
* Free cash flow of GBP 33.6m representing nearly 100% cash conversion.
* Strong balance sheet with interest cover of 21.9x and net debt to EBITDA of 1.2x.



Current Trading & Outlook

Group sales remained strong throughout the half year, growing by 24% in the first quarter and 25% in the second quarter. In October, Group revenue has grown by 21%, the UK by 12% and International by 26%. Within International, Continental Europe has grown by 21%, North America by 38% and Asia Pacific by 21%.

We are continuing to invest in our International markets, electronics and eCommerce initiatives in order to drive future sales growth. Whilst recognising the global economic uncertainties and more demanding comparatives in the second half, we believe that the outcome for the year as a whole will be ahead of our previous expectations.

Ian Mason, Group Chief Executive, commented: "These are excellent results reflecting the success of our strategic initiatives which combined with our operating leverage delivered an increase in profits of over 100%.

All regions reported significant sales growth, with our Allied business in North America achieving revenue growth of 41%. Our International business now represents 70% of our sales and we will continue with our strategy to exploit the attractive structural growth opportunities in these markets.

Electronics was our strongest performing category, reflecting the benefits of our previous and ongoing investment and focus in this area. With 42% sales growth in the period, eCommerce sales now represent around 48% of Group sales and our target of 70% eCommerce revenue share remains on track.”

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