Trading Update

Electrocomponents plc today issues a trading update for its first half ended 30 September 2018 ahead of publishing half-year results on 20 November 2018

Our good start to the year continued into Q2, as a positive market backdrop and strong execution drove market share gains and improved profitability across the business.

·      Like-for-like revenue growth⁽¹⁾ remained strong at 10% in the second quarter leading to H1 like-for-like revenue growth of 10%.

o  RS Pro, our own-brand business, accelerated through the period and outperformed the underlying Group with like-for-like revenue growth of 12% in H1.

o  Digital revenue grew in line with the Group overall, with like-for-like revenue growth of 10% in H1.

·      We continue to make good progress on our initiatives to drive gross margin. As anticipated, we are seeing some year-on-year improvement in H1 but face tougher gross margin comparatives in H2. We remain on track to deliver stable gross margins in our base business ⁽²⁾ for the full year.

·      On 31 May 2018 we completed the acquisition of IESA. IESA has delivered strong double-digit revenue growth in line with expectations and new business performance is encouraging.

·      We remain on track to deliver £4 million of cost savings in the current financial year as a result of our Performance Improvement Plan phase II.

·      Given good progress to date, we expect half-year adjusted profit before tax to be around £100 million (H1 2018: £79.0 million).

·      We continue to take advantage of the strong momentum in the business to increase investment to support future growth. In particular we plan to invest in Asia Pacific in both digital and customer acquisition to drive faster longer-term growth in this important region. We are also investing to further develop our capabilities in Electronics and Single Board Computing.  

Notes:

1.        Like-for-like change excludes the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates for the period, and the impact of acquisitions. Revenue is also adjusted to eliminate the impact of trading days year on year.

2.        Base excludes the post-acquisition results of IESA.

3.        Our profit remains sensitive to movements in exchange rates on translation of overseas profit. Average exchange rates for the year ended 31 March 2018 for euro and US$ respectively were €1.13 and $1.33. Every 1 cent movement in the euro has a circa £1.3 million impact on annual profit. Every 1 cent movement in US$ has a circa £0.4 million impact on annual profit.

4.        In the year ending 31 March 2019 we expect to see a positive impact of around £9 million on revenue from additional trading days compared with the year ended 31 March 2018.

5.        As announced in May 2018, we are moving to a simpler regional structure with three regions EMEA, Asia Pacific and the Americas. Today, in a separate announcement, we have issued a restatement of the financial results for the year ended 31 March 2018 and for the half year ended 30 September 2017. In this restatement we have also included the like-for-like revenue performance for the first half of 2019 on this new basis.