Decade's best as Farnell looks to emerging markets

The Leeds-based group has seen very strong growth in China and India and the three months to August 1 turned out to be the group's best quarter ever in Europe.

Chief executive Harriet Green said the three months to August 1 represented the fourth quarter of outperformance for the group.

"Customers who came to us during the recession have stayed with us. We're feeling quite confident. There is a lot of new technology and innovation out there," she said.

The group, which counts Microsoft, Nokia and Philips amongst its customers, has rapidly expanded into developing markets across Asia and Eastern Europe.

Premier reported a 47 per cent increase in underlying pre-tax profits to 23.8m for the three months to August 1, on revenues 30 per cent higher at 252m.

This outperformed expectations of pre-tax profits of 21m and revenues of 234m.

Growth has continued since the beginning of August with sales up more than 25 per cent year-on-year. "The comparatives get harder, but we are seeing continued good performance into September," said Ms Green.

Premier's shares closed up 17.5p at 257.1p.

Analyst Gary Hewitt at Investec said the results were well ahead of his forecasts, and he expects to upgrade his forecasts by between three and five per cent.

"While the underlying markets have been recovering we also believe Premier Farnell has a strong point of difference with its evolving e-commerce offering and is, consequently, taking market share," he said.

Premier Farnell is keen to develop its web-based business, which has higher margins than catalogue sales. Nearly half of sales, and more than 60 per cent of European sales, are now via the web.

Ms Green said last year's launch of a social community for electronic engineers called Element14 has played a big role. "Element14 is attracting 300,000 customers every quarter and a very high percentage are clicking through and purchasing," she said.

Availability of electronic components had been constrained as manufacturers have struggled to meet demand following the downturn, but Ms Green said the company had been well supported by its suppliers. The group has raised its interim dividend by five per cent to 4.4p.