warns cuts 
possible as 
sales slump

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Electronics distributor Premier Farnell is preparing for further cost cuts if sales don’t pick up over the next few months.

The Leeds-based group, which sells batteries, computer parts and security products to engineers in over 100 countries, said it has already made £800,000 of cost savings this year by making 41 employees redundant.

The jobs were lost across the group internationally.

In Europe there were 11 redundancies of which “a handful” were in the UK.

Premier’s new chief executive Laurence Bain said that the overall UK headcount has increased.

Around 40 extra staff have joined the group’s European operation, of which around 20 have been in the UK.

“The job losses were in more senior positions,” said Mr Bain. “They addressed some of the duplication in the business.”

He said that if the group continues to trade at current levels it will probably take more action.

“We were down around four per cent in November. Adjusting for Hurricane Sandy we were down three per cent. If it stays at minus three we’ll take some action.”

Premier said third quarter profits to the beginning of November fell 11 per cent, partly due to lower revenues in the UK.

Pre-tax profits slipped to £17.3m for the third quarter, down from £21.1 m.

Sales fell 1.6 per cent to £233.5m.

The company posted a 2.3 per cent fall in its marketing and distribution business. UK revenues from the business fell 7.3 per cent. Revenues from the industrial products division grew 8.1 per cent.

Premier Farnell makes 92 per cent of total revenues from its marketing and distribution business, while the industrial products business brings in the rest.

Analyst Robin Speakman at Shore Capital said: “Conditions remain tough for the electrical/electronics distributors and despite some signs of improvement in August, reported at the interim results in September, volatility has remained a feature of the market with a return to like-for-like declines across the group in the third quarter overall.

“Apart from Asia Pacific, all regions were below our expectation, with the heaviest declines centred in Europe including the UK.

“As a cyclical point, it is true to say that the bottom is getting ever closer, but visibility remains weak.”