Hi-tech supplier sees huge surge in profits

Shares in the Leeds-based group, which supplies thousands of components ranging from LEDs to microchips and batteries, rose 11 per cent, a rise of 24.4p on the news to close at 244p – the second highest climber in the FTSE 250.

The company said pre-tax profits rose from 13m to 22m in the three months to April 30 after strong sales growth.

Chief Executive Harriet Green said that customers cut their budgets during the economic downturn, but now they have more money to spend on research and development.

"We have come out of the recession fast, early and well," she said. "The recovery will be a little jerky, a little variable, but our aim is to get back to the size we were before the recession by the end of this year."

Analysts said the first quarter results were well ahead of their forecasts.

Analyst Jane Sparrow at RBS said that all regions have seen an improvement in both sales momentum and margins and she upgraded 2011 and 2012 forecasts by 18 per cent.

"Higher top line growth across all regions is being driven by a combination of macro recovery and continued strategy execution. We remain buyers," she said.

Premier, which counts Philips, Microsoft and Nokia among its customers, said its focus on the internet had helped boost quarterly year-on-year sales by 20 per cent to 244m.

Ms Green said the demand for innovative technology in emerging markets has soared. The group saw sales growth of 76 per cent in Eastern Europe and emerging markets now account for 22 per cent of revenues.

Greater China reported growth of 113 per cent and India saw growth of 74 per cent

But it is not just emerging markets that are seeing rising demand. North America grew by 30 per cent, and the UK saw growth of 18 per cent.

"The UK is looking really good and we're taking market share," said Ms Green. "The UK team has surveyed small and medium sized businesses to find out what they want. The UK has done really well."

The company is now looking for bolt-on acquisitions.

Chief financial officer Mark Whiteling said: "I think over the next

three years we'd like to do somewhere between eight and ten acquisitions, probably in the 8m to 10m range. We're looking in both emerging and established markets."

The company saw accelerating sales in May with year-on-year revenue growth of 30 per cent.

Premier's business model of shipping goods the day they are ordered does not give it much visibility over future performance.

Charlie Menegatos, senior trader at Accendo Markets said he was impressed with the "all round solid" set of first quarter results.

"This resounding set of results eclipsed analyst expectations and every benchmark set down by the company and, while it can be argued the rising share price has kept pace with events, Premier shares have taken a breather in recent weeks in the run up to the results.

"We expect the exceptional set of results to propel the shares back on course to touch April resistance at 249p, and beyond as the year progresses," he said.

Earlier this year Premier launched an interactive online store to

target the US market.

It expanded its element14 community and technical portal to include a specific US online shop. The group is targeting the lucrative

electronic design engineer community, and said element14 supports every stage of the design process.

Site clearly has right elements

Premier Farnell launched element14, its "Facebook for engineers" a year ago.

The site was conceived at a time when engineers' budgets had been slashed so they couldn't spend money if they wanted to.

Premier Farnell decided to launch an online social networking site that would allow engineers to exchange ideas. "Regardless of age and gender, engineers come onto element14 to work, to chat, to ask each other things and then they can very easily click to buy products," said Premier's chief executive Harriet Green.

A year on, the site is attracting up to 6,000 customers a day. The average "click thru" rate from element14 to Premier's transactional sites is some 50 per cent higher than for a standard transactional website.