24th May 2018 09:30
LONDON (Alliance News) - Engineering firm Electrocomponents PLC hiked its dividend Thursday after reporting its profit and revenue jumped significantly as it looks to make further progress.
Shares in Electrocomponents were 9.4% higher at 687.40 pence on Thursday, the biggest gainer in the FTSE 250 index.
For the year ended March, pretax profit widened 33% to GBP168.6 million from GBP127.1 million the year prior. This was after revenue grew 13% to GBP1.71 billion from GBP1.51 billion the year before.
"2018 has been a year of strong progress and significant growth in revenue, profitability and earnings," Electrocomponents Chief Executive Officer Lindsley Ruth said. "Our Performance Improvement Plan has delivered a major step forward in our quest to become first choice for customers, suppliers and employees but the opportunity for further growth and improvement still remains significant."
Electrocomponents proposed a final dividend per share of 8.0 pence, up 19% from 6.75p the year prior. For the full year, the dividend rose 7.7% to 13.25p from 12.30p the year prior.
"Today we are launching a new phase of the improvement programme to ensure we fully capitalise on this exciting opportunity", Ruth added.
As part of this, Electrocomponents plans to continue the process of simplifying and scaling the business. The next phase is expected to generate GBP12 million in annualised savings by financial 2021, with GBP4.0 million targeted in financial 2019.
The firm will look to make the company a regionally organised business around its three main geographies as well as introduce new products and to use its "strong cash flow" to make disciplined investments to accelerate growth.
"We have made an encouraging start to 2019, with strong revenue growth in the first seven weeks of the year despite tough trading comparatives," Electrocomponents added in a statement. "All our regions continue to see good revenue growth and market share gains. We are accelerating initiatives to create a leaner and more efficient operating model, which means that we are well positioned to continue to make good progress in the year ahead."
In a separate announcement, Electrocomponents said it would acquire industrial inventory management firm IESA for GBP88 million in cash from Gresham Private Equity on a cash and debt free basis. The deal will be paid for through a new GBP120 million term loan, which is also to be used for "general" corporate purposes.
"The acquisition of IESA will improve our value-added services proposition, significantly enhancing our offer for customers", Ruth said. "We believe the combined digital capability of IESA and Electrocomponents is a market differentiator and will greatly enhance the experience we can offer our customers and suppliers with a much wider range of eCommerce-led solutions. We are excited to welcome IESA to the Electrocomponents Group."
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