Electrocomponents revenue rises, earnings fall in Covid year

Electrocomponents reported revenue growth of 2.5% to £2bn in its final results on Tuesday, with like-for-like growth of 1.4%, which it put down to “strong” market share gains in its key markets.

The FTSE 250 company said its adjusted operating profit margin was down 1.9 points at 9.4% due to gross margin reduction and additional costs, as its adjusted operating profit slid 14.7%to £188.3m.

Its adjusted profit before tax fell 17% on a like-for-like basis to £181.7m, while its profit before was 19.5% lower aat £160.6m.

Adjusted earnings per share decreased 17% to 31.3p, and were off 18.4% on a like-for-like basis, while earnings per share fell 20.2% to 27.7p.

Electrocomponents confirmed its full-year dividend was ahead 3.2% year-on-year at 15.9p, in line with its progressive dividend policy, while adjusted dividend cover was 2.0x.

It described its adjusted free cash flow generation as “strong” at £145.4m, driven largely by its focus on conserving cash.

Looking at its operations, Electrocomponents said “superior” availability, product and service solutions, and being “digitally-enabled”, drove its outperformance.

RS PRO like-for-like revenue growth of was 9.7% due to greater brand awareness and new product development, the board said, while web revenue grew 2.4%, with total digital revenue accounting for 63% of group revenue.

It said its three strategic acquisitions were performing in line with expectations, with integration and cross-selling on track.

Despite external challenges, it said its group net promoter score remained “high” at 54.4, compared to 55.7 in the prior financial year.

Electrocomponents said its operating costs included around £19m relating to Covid-19 and Brexit, due to higher freight and cost to serve.

The ‘RISE’ programme, designed to “simplify and streamline” the group, delivered £7m of cost benefits.

On its current trading, Electrocomponents reported a “strong” start to the year due to Covid-19 comparatives, reporting that in the first seven weeks of the 2022 financial year it had seen “very strong” revenue growth year-on-year.

Looking at its performance on a two-year view, like-for-like revenue growth remained “robust”, and broadly in line with its annual like-for-like revenue growth in the second half of the 2021 financial year.

Its performance in the Americas continued to benefit from a wider product range due to the extended distribution centre and change in focus by its sales teams.

Electrocomponents said its was “particularly pleased” with the performance in the Europe, Middle East and Africa geography, given ongoing lockdowns and the logistical challenges presented by Brexit.

Asia-Pacific, meanwhile, remained strong, helped by a “buoyant” electronics market.

“Electrocomponents has delivered a strong performance in a challenging year,” said chief executive officer Lindsley Ruth.

“We continue to drive market share gains, invest in our organic growth opportunities and generate good cash flow.

“In addition, we welcomed three high quality businesses into our group to accelerate our strategic aspirations.”

Ruth said that, while the company was mindful of external pressures including ongoing cost inflation and potential supply chain shortages, it was confident that it was “well-positioned” for a “rapidly changing” world.

“The group has carried strong momentum into the new financial year, and we are excited about the opportunities we see through our ‘Destination 2025’ strategic roadmap to drive profitable market share growth and operational efficiencies.”

At 0825 BST, shares in Electrocomponents were down 2.21% at 1,018p.