18th Sep 2014 07:31
LONDON (Alliance News) - Premier Farnell PLC reiterated its expectations for the full year Thursday despite seeing its pretax profit dip in the half year to February 1, as it expects its investments and reorganisation to position it to accelerate top-line growth and deliver target profitability in its second half.
The electronics company maintained its interim dividend at 4.4 pence.
In the first half the company posted a pretax profit of GBP36.4 million, down from GBP38.1 million in the previous year, as revenue fell to GBP479.3 million from GBP498.2 million. Premier Farnell saw GBP2.3 million in restructuring costs relating to its business reorganisation, and GBP100,000 for the acquisition of AVID Technologies.
Premier Farnell is presently undertaking restructuring across its business, as part of a process it began in June in an effort to produce cost savings of GBP6 million to GBP8 million in the financial year 2015/16. The company continues to expect this re-organisation to cost GBP8 million.
Under the reorganisation, the company is moving its marketing and distribution business in the Americas, Europe and Asia Pacific into a new, integrated global structure under a new executive team.
Premier Farnell said it had made progress towards its sales growth target of 6%; it saw sales growth of 3.3% in the first half, with 4.7% growth in the second quarter. The company said that sales momentum had been boosted by a gradual improvement in the market backdrop, and the benefits of strategic initiatives beginning to come through.
In Premier Farnell's marketing and distribution division revenue declined across all of its regions, with revenues from the Americas in particular falling to GBP164.3 million from GBP181.5 million.
In Europe, the UK market remained challenging due to heightened competition, and declines in France and Scandinavia were offset by growth in Spain, Italy, Germany and Eastern Europe.
In the Asia Pacific region sales were up 19%, driven by strong growth in China and India.
In the Americas, sales were up 0.9% for the first half, boosted by Avid Technologies. Throughout the half year sales momentum improved, as a decline of 0.5% in the first quarter was offset by 2.3% sales growth in the second.
Premier Farnell said it was on track with its planned investments into its design services business, and its eCommmerce channels.
"Following the completion of the planned strategic investments over the remainder of this year, we believe that the group will be well positioned to accelerate its top-line growth and deliver profitability in line with our target," said Chief Executive Officer Laurence Bain in a statement.
Jefferies reiterated its Buy rating for the stock, noting "several encouraging developments". Although revenue was below the bank's estimate, partly due to stronger exchange rate headwinds in Asia Pacific, gross margin was ahead of its expectations.
Shares in Premier Farnell were trading up 0.7% at 189.90 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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