Electrocomponents : Trading Statement

Electrocomponents plc, the global distributor for engineers, has today issued a trading update for the six months ended 30 September 2014 ("H1") ahead of publishing half-year results on 13 November 2014

Overall trading in the second quarter has been consistent with the first quarter trends which were outlined in the interim management statement in July.

Group underlying sales growth (1) in H1 was 3%, with International sales growth of 5% and UK sales declining by 2% (UK sales excluding Raspberry Pi declined by 1%). Within International Continental Europe grew by 2%, North America grew by 10% and Asia Pacific grew by 5%. There has been good progress implementing the Group's global strategy during the period. eCommerce sales growth in H1 was around 5% and sales of our Famous For product categories, comprising our electronics and automation and control ranges, grew by around 5%.

The year on year decline in gross margin in H1 is expected to be similar to the first quarter decline of 0.8% points, primarily reflecting faster sales growth in North America, where gross margins are typically lower, product mix effects and increased discounting in the UK and Asia Pacific.

Fewer trading days and adverse currency movements compared to the prior year are expected to have a combined impact on H1 operating profit of around £4 million (2) . Sales team restructurings in Asia Pacific and the UK are expected to result in reorganisation costs of around £2 million in H1, which will be shown after headline profit before tax.

We are progressing with the actions to improve performance that we outlined in July. As previously indicated, these are expected to benefit the second-half financial performance.

Ian Mason, Group Chief Executive, commented:

"In the first half Group underlying sales growth was 3%, led by a strong performance in North America. However, the UK and France were in decline in the period. Whilst mindful of the more challenging economic environment across Europe, we are progressing with the actions to improve sales in these markets in the second half.

We are committed to our global strategy and have the right organisation in place to deliver it. We are implementing our strategic initiatives which are resulting in faster sales growth from eCommerce and our Famous For product categories. During the second half we will be continuing the planned investment in the strategy and are confident that it will enable us to grow our market share and improve our financial performance over the medium term."

Notes:

(1)  Sales growth rates, unless otherwise stated, are adjusted for trading days and currency movements ("underlying sales growth/decline").

(2)  As previously indicated, fewer trading days and currency movements are expected to have a combined impact on 2015 operating profit of circa £7 million.