7th Jul 2011 07:01
TRADING UPDATE
Premier Farnell plc, the leading distributor of products and services to engineers and purchasing professionals globally, announces an update to investors following the close of its June trading period.
After two full months of trading in the second quarter year-on-year salesgrowth for May and June combined was lower than our target range of 6-8%, at1.4%. Although June sales per day were stable with May, this performancereflects a marked moderation of growth rates in all global markets during June,particularly Europe and North America, and compares to the strong performancereported in Q2 last year when we delivered growth of 30%. As a result of the rapid change in the global business environment since ourlast statement, and recognising the limited visibility in our business model,the Board now expects that second quarter revenue growth will be less than thetargeted range of 6-8% over the prior year. It is now apparent that significant inventory purchases were made in April andearly May by industrial and technology customers to service their underlyingdemand following the Japanese earthquake. In light of the global slowdown thisinventory is now likely to take longer to be utilised before purchasing returnsto more normal levels. We continue to invest in our customer proposition to take advantage of thegrowth opportunities inherent in our strategy. This strategy has successfullydelivered growth by increasing customer numbers, focusing on the web, achievingcost efficiencies, and growing the EDE and specific MRO segments in mature anddeveloping markets. Importantly our gross margins remain stable and we continueto acquire customers in-line with our target, through increased year on yearweb penetration. This strategic investment will be managed in line with current activity levelsand further supplemented by cost savings and an even greater focus onefficiency to ensure the business is appropriately structured for the future. Our continued business transformation, with an increased focus on the lowercost web channel, enables us to take steps to reduce our costs faster and moreefficiently than before in response to the difficult market conditions. As wedid successfully when markets last slowed we will now accelerate and intensifythe execution of our reshaping and cost reduction programmes. We anticipate that the benefits of these cost actions during the balance of theyear will mitigate substantially the impact of the lower sales growth rates,and therefore the Board continues to believe that Premier Farnell will deliverprofitable growth this year, albeit marginally lower than our previousexpectations.
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For further information please contact: Harriet Green, Chief Executive Officer, Premier Farnell plc +44 (0) 20 7851 4100 Richard Mountain, Managing Director, Financial Dynamics
+44
(0) 20 7269 7186
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