30th Jul 2015 14:02
LONDON (Alliance News) - Premier Farnell's profit warning was the result of a material slowdown in Raspberry Pi sales, a de-acceleration in growth in its French and German businesses and weakness in the UK market, says analysts at Numis.
The electronics retailer warned Wednesday it now expects its adjusted operating profit for its first half to be down 10% compared to the previous year, hit by slowing sales, challenging market conditions and the continued weakness of the euro.
Numis says the slowdown in Raspberry Pi sales was caused by supply constraints and says the weakness in the UK which "manifested" in June failed to recover in July, contributing toward the company's profit warning.
Numis says Premier Farnell pulled Raspberry Pi product intended to be sold in the second quarter and sold it in the first, meaning demand in the second quarter could not be satisfied.
In terms of markets, growth in the French and German markets has slowed since the first quarter of 2015 and says the decline being experienced in the UK was "materially worse" in June compared to earlier in the year. Numis says this was caused by a loss of market share to fellow London-listed Electrocomponents.
Premier Farnell also is conducting an operational review in light of the difficult trading conditions.
"We expect the operational review to lead to a reduction in the number of distribution centres, currently 9, and withdrawal from some geographic markets or businesses [such as] Akron Brass," says Numis.
Numis retains its Buy rating but lowers its target price to 180.0 pence from 215.0 pence.
Premier Farnell shares were down 4.9% to 133.10 pence per share on Thursday.
By Joshua Warner; [email protected]; @JoshAlliance
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