2nd Oct 2015 06:26
LONDON (Alliance News) - Electrocomponents PLC on Friday said revenue growth slowed in the second quarter amid continued weakness in the UK and worse conditions in the North American market.
The FTSE 250-listed company, which makes electronic, automation and control components, said its group revenue growth in the second quarter to the end of September was 3.0%, slowed from the 5.0% growth in the first quarter and dragging first-half revenue growth down to 4.0%.
The company said the primary culprit for the slowdown was North America where, after a slowdown in trading activity was flagged back in July, conditions continued to weaken in August, before recovering partially in September, This meant revenue fell in the second quarter in North America by 3%, reversing the 3% growth in the first quarter to leave the first half flat.
UK revenue fell 1% in the half, with the same decline in both the first and second quarter, though growth in its Continental Europe business offset some of the weakness elsewhere, with revenue up 13% in the first half, with both the first and second quarters providing that growth rate.
The group said it expects its gross margin to decline by around 1.7 percentage points in the first half, in line with trends in the first quarter, primarily due to the negative impact it is feeling from foreign exchange and also due to pricing and revenue mix effects. Electrocomponents said it continues to implement actions on pricing, purchasing and discounts to try to mitigate the problems.
The cost savings the group is working on should feed through in the final quarter of its financial year to the end of March and the weighting of the cost benefits, plus easier gross margin comparatives, will mean its full-year results are more second-half weighted than normal, it said.
"In the first half our largest business, Continental Europe, has performed exceptionally well with double digit revenue growth across all its key markets. Strong growth here is set against the impact of the well documented slowdown in the North American market," said Lindsley Ruth, Electrocomponents chief executive.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
ECM.L