Emerging markets help Premier Farnell to improve profits despite a challenging year

The Leeds-based company said the current year has got off to a positive start despite adverse weather conditions hitting its North America business in February.

Premier said pre-tax profits rose 8.4 per cent to £74.8m in the year to February 2 while revenue rose 2.6 per cent to £968m.

Chief executive Laurence Bain said sales in emerging markets grew 14.9 per cent in the year, ahead of the company’s target of 10 per cent.

Asia-Pacific revenue rose 12.4 per cent during the year, with sales growth rising to 15 per cent in the second-half.

The group said sales per day in China and India grew 25.7 per cent and 20.3 per cent respectively.

Analyst Robin Speakman at Shore Capital said: “The company reports on a tough year, as reported at the end of January.

“We sense that the new year has started likewise (noting the strains of adverse weather impacting delivery in North America), but that the outlook is slowly brightening for demand.

“Cash flow was around £10m better than our forecast, so a pleasing result here with the dividend for the full year held at 10.4p.

“Regionally, we note particular strength in Asia-Pacific and weakness in Europe.”

In addition to its annual results, Premier said it has agreed to buy US-based privately held engineering design services firm AVID Technologies Inc for £7.8m in cash.

Analyst Kean Marden at Jefferies said: “The results are in line with guidance provided in January, but disclosure regarding new strategic initiatives is far more interesting.

“Increasing development kit exposure should provide influence over an early phase of the design cycle while expanding the service offering into higher value-added areas should be positive for margins.”

A development kit is a printed circuit board, provided by an electronics supplier, containing a microprocessor and the minimal support logic needed for an engineer to become acquainted with the microprocessor on the board and to learn to programme it.

Mr Marden said they often end up as modules used in a design, so if Premier can influence this very early stage of the product life cycle there should be positive market share implications for its traditional business.