Premier Farnell to cut dividend and sell fire-fighting business
Electricals distributor Premier Farnell has issued another profits warning and said it will cut its dividend and sell a non-core business as it battles to fight slowing sales growth.
The Leeds-based company, which fell out of the FTSE 250 earlier this month after difficult trading, forecast a fall in adjusted operating profit and said it will sell its industrial products division Akron Brass in Ohio and stop direct operations in Brazil.
The Akron Brass business makes and sells high-performance fire-fighting equipment for fire truck manufacturers, public fire services and industrial facilities.
The unit, with a high market share in North America, accounted for about 7.5 per cent of Premier’s total revenue.
The company put in place a new global structure last year, combining its marketing and distribution businesses in the hope that it would boost performance.
But slowing sales growth continued to plague the maker of Raspberry Pi – the mini, low-cost computer created to help millions of youngsters get online and learn to code – and it announced a review of its operations in July.
Interim CEO Mark Whiteling said: “Is it change? Yes it is change. Is it too much change? No.”
Its marketing and distribution business accounted for about 80 per cent of turnover last year.
The company cut its interim dividend by almost 41 per cent and said it expects full-year adjusted operating profit of between £73m and £77m, down from £88m last year.
Analysts at RBC Capital Markets believe there is a strong likelihood that Premier Farnell could be acquired. Mr Whiteling said the board will look at all options as part of a review.