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

0
Have your say

​​​​​​​ELECTRONICS distributor Premier Farnell reported a rise in annual profits despite a tough year, helped by better-than-expected sales in emerging markets such as China and India.

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​-Pac​ific​ 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.