Tough UK and US markets hit Premier Farnell

Premier Farnell sees strong growth in Asia Pacific

The Leeds-based firm said said sales per day grew by 0.5 per cent in the three months to November 1 as strong double digit growth in the Asia Pacific region partially offset the slowdown in the US and the UK.

The group said growth was driven by strong demand for single board computers, in particular the Raspberry Pi2, as well as an improved performance at its fire-fighting equipment business Akron Brass.

European sales declined by 0.5 per cent as a result of the weak UK performance. Continental Europe grew 3.7 per cent with the majority of markets growing.

Sales in the Americas (excluding Brazil), which represents 35 per cent of group revenue, fell 6.7 per cent due to a more challenging trading environment in industrials, as indicated by weaker PMI trends and economic data.

Sales in Asia Pacific grew 14.9 per cent and the region showed good growth in most markets with China, its largest market, growing at 13.8 per cent.

Premier Farnell said it remains cautious about the ongoing challenging industrial backdrop in the US and it expects to see margin pressure as a result of the current competitive environment.

Following an operational review, the group has identified cost savings of £19m on an annualised basis.

"We expect an improvement versus current performance of £13m in 2017, with the balance of the savings achieved in 2018," the group said in a trading update.

The benefits will cost around £10m, including severance costs o£4m and £6m in additional one-off resource requirements. These will largely be incurred in 2017.

In September the group announced its intention to dispose of Akron Brass.

"We have had considerable interest in the business and the process is progressing well. We are confident that we should be in a position to exchange contracts in the first quarter of 2016," the firm said.

Following the ousting of chief executive Laurence Bain earlier this year after disappointing results, the group said the global search to identify a permanent CEO is actively ongoing with both internal and external candidates being considered.

Mark Whiteling, interim CEO, said: “Our results in the quarter are a reflection of the challenging conditions in the UK and US, however we are encouraged by the strong growth we continue to see in the Asia Pacific region.

"The outcome of the operational review, announced today, has identified a number of efficiency and margin improvement initiatives which will position the group to deal with the margin pressures that it has experienced in recent times. The board is confident that the combination of these initiatives will provide the platform for future growth.”

The results for the full year ending January 31 will be announced on March 17.