17th Sep 2015 06:47
LONDON (Alliance News) - Premier Farnell PLC on Thursday said it has opted to rebase its dividend, slashing its interim payout by 41%, as it reported a fall in pretax profit for its first half, and said it will sell its Akron Brass business as part of an ongoing operational review.
The company began an operational review in July after it issued a profit warning, and as part of this review said Thursday it will sell Akron Brass and cease direct operations in Brazil due to sub-optimal returns and high costs of operations. In August Chief Financial Officer Mark Whiteling moved into the role of interim chief executive, replacing Laurence Bain, as the company cited a need for a change in leadership after recent disappointing results.
The technology products company said it has concluded it is "appropriate to rebase" its dividend, and reduced its interim dividend to 2.6 pence from 4.4p a year before. "The board recognises the significance of the dividend to our shareholders, but also the importance of it being sustainable and progressive, and we will therefore target dividend cover in the range 1.5x to 2.0x going forward," said Chairman Val Gooding in a statement.
For the half year to August 2, Premier Farnell reported a pretax profit of GBP30.6 million, down from GBP36.4 million a year before, despite revenue rising to GBP498.6 million from GBP479.3 million, as gross margin was hit by continued downward pressure from pricing, product mix, and the weakness of the euro.
Premier Farnell also lowered its expectations for its full year, and now expects adjusted operating profit to be between GBP73 million and GBP77 million. It had previously forecast for its adjusted operating profit to be down around 6% compared to the previous year. For its previous financial year, the company reported an adjusted operating profit of GBP88.0 million, meaning the annual profit decline now will be as much as 17%.
"To improve our performance, we must refocus on our core distribution business. We must ensure that we deliver what our customers and suppliers demand by consistently focusing on the fundamentals of distribution - product, pricing and proposition. The operational review referred to in our July statement is ongoing and making good progress. We believe that implementing the results of this work will improve the operational and financial performance of the group," said Whiteling in a statement.
Premier Farnell will be demoted from the FTSE 250 next Monday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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