Premier Farnell hits right buttons as sales boost cheers market

Premier Farnell CEO Laurence Bain.
Premier Farnell CEO Laurence Bain.
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Electronics distributor Premier Farnell cheered the market with the news that sales picked up during the second half of the year following growth in every part of the business.

The Leeds-based firm said group sales per day for the full year are expected to grow 2.6 per cent year on year.

Excluding sales of the Raspberry Pi mini computer, group sales are expected to grow 3.5 per cent year on year in the second half.

Chief executive Laurence Bain said investment in customer service is starting to pay dividends.

“We expect the group’s full-year operating margin to be broadly in line with the first half. Whilst we anticipate that gross margin will be approximately 0.4 percentage points lower than the first half, our continued focus on driving cost efficiencies will deliver operating margin and operating profit in line with our expectations.”

Analyst Robin Speakman at Shore Capital said: “The company reports a mixed picture of trading through its fourth quarter period this morning, but overall showing a stronger fourth-quarter revenue performance than we anticipated by 2.1 percentage points, so not insignificant.

“Whilst Europe continues to be weak, more so than we expected, North America was a little better than we had forecast. We expect Europe to improve over the next couple of quarters.”

Analyst Kean Marden at Jefferies added: “Organic revenue growth accelerated to 5.2 per cent in the fourth quarter, ahead of our four per cent estimate and the fastest rate since the first quarter of 2012.

“However, strategic investments, designed to support medium-term profit recovery and achieving the 10-12 per cent earnings margin target, are likely to weigh on 2015 earnings.”

The improving sales trend came despite the impact of the US Federal Government shutdown last year.