Premier slashes dividend but sees better times ahead

The Leeds-based firm slashed its final dividend for 2015 to 3.6p per share as it experienced difficult trading conditions in North America and the UK. It paid a 10.4p dividend the previous year.

Adjusted pre-tax profits fell from £74m to £57m in the year to January 31.

But interim chief executive Mark Whiteling said; “We have seen signs of improvement in the UK. The fourth quarter was better than the third and the trend continued into February.

“We’ve seen the benefits of major upgrades to the web platform. We’ve seen an increase in traffic which is up by about three per cent. It’s encouraging and positive.”

However the US market continues to be tough.

“The US is a more difficult and challenging market. We are controlling discounting to make sure we secure incremental business rather than selling at a lower price,” said Mr Whiteling.

The company said US sales per day fell 6.9 per cent in the third quarter and by 5.1 per cent in the fourth quarter. The Americas accounted for nearly 35 per cent of the company’s revenue in 2015.

Full-year revenue rose to £982.7m from £960.1m a year ago.

Analyst Robin Speakman at Shore Capital said: “The specialist electronics distributor has announced its final results calling time on a very difficult year for the company with few if any highlights, in our view.

“Adjusted pre-tax profit missed our target by £1m at £57m.

“The current year sees the impact of the sale of the Akron business. This is set to see earnings and margins come under further pressure, but with a clear balance sheet benefit. The Premier story is now focused upon remedial action on the operating margin, restructuring the company for better performance and a return to growth.

“We fear that material further restructuring charges will potentially be levied over the next two years.“

Mr Whiteling said: “We’ve got a cost base that we think can support the business. There are always opportunities to drive efficiencies but we have nothing planned.”

Earlier this month the group launched the latest version of its Raspberry Pi mini-computer, which has built in Wi-Fi and Bluetooth.

Premier said Raspberry Pi 3 has twice the performance of the previous generation but will cost the same as its predecessor at £26.

Premier Farnell’s element14 division, which manufactures and distributes Raspberry Pi, said the new generation board is faster and more powerful than ever before and comes with built-in wireless LAN and Bluetooth connectivity.

Mr Whiteling said initial stocks have sold out and the group expects to sell half a million Raspberry pi 3s by the end of June.

Last week Premier appointed a permanent chief executive following the ousting of Laurence Bain last August

The group has appointed Jos Opdeweegh to the top role and he will take over on April 11.

Mr Whiteling will become deputy chief executive and will continue to oversee the financial side of the business.