Electrocomponents plc today issues a trading update for the year ended 31 March 2021, ahead of publishing full-year results on 25 May 2021
LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "We are very pleased with another strong performance in the fourth quarter. The business demonstrated its resilience and agility once more, rising to the combined challenges of lockdown, Brexit and extreme weather conditions in Texas with trading not missing a beat; Group performance continued at a similar rate to the third quarter until mid-March. The last two weeks of the period saw a material improvement in revenue growth against weaker comparatives when most of EMEA entered the first COVID-19 lockdowns. We expect profit for the year ended 31 March 2021 to be around the top end of the consensus range(1).
The response of our people to the challenges faced this year has been exceptional and our outperformance continues to demonstrate the strength of our differentiated proposition which is resonating with both our customers and suppliers, delivering market share gains and deeper customer relationships. However, we remain highly mindful of the external pressures such as continuing freight inflation, COVID-19 uncertainties, translation headwind from sterling's strength, Brexit and ongoing unwinding of weak comparatives, but also excited about the trading opportunities we see. Looking forward to the year ahead, we are well positioned to deliver ongoing growth in line with expectations through continued organic and strategic investment, whilst operational efficiencies will drive margins as we continue on our Destination 2025 journey."
Like -for-like revenue growth(2)
Q3 to Dec 2020
Q4 to Mar 2021
Year to Mar 2021
· Strong revenue performance across Q4 with continued market share gains
o Group Q4 like-for-like revenue growth of 12%, of which c. 4% benefit from weaker COVID-19 comparatives
o Within EMEA, UK momentum improved from end of January, resulting in high single digit growth in Q4
o Our other EMEA markets grew double digits due to tougher COVID-19 impacts in March 2020
o Strong performance in the Americas, overcoming the negative impact from extreme weather in February
o Growth in Asia Pacific underpinned by strong double-digit increase in Greater China
o RS PRO revenue grew 18% like-for-like (c. 5% benefit from COVID-19 comparatives); full year up 10%
o Digital like-for-like revenue grew 12% (c. 4% benefit from COVID-19 comparatives); web revenue rose 14%
· Full year 2020/21 profit expected to be around the top end of the consensus range(1) following stronger end of year revenue growth
o Second half gross margin likely to be lower than first half due to continuing cost pressures in freight, a regional mix effect and inventory provisions (including c. 100bp year-on-year hit from deflated PPE products)
o Operating costs affected by ongoing COVID-19 related charges in freight and labour and a higher cost to serve post Brexit, accounting for additional c. £9 million in H2
o RISE programme on track, delivering c. £7 million of operational savings this year
· Cost pressures in 2021/22 include ongoing freight inflation, COVID-19 uncertainties, Brexit and translation impact of stronger sterling(3)
· Continued focus on cash generation to support organic and inorganic strategic growth
o Addition of John Liscombe Limited in February, the third acquisition this financial year
o All acquisitions performing in line with expectations, with future cross-selling opportunities on track
o Pipeline of strategic inorganic opportunities is strong, and we retain a rigorous focus on value creation
Chief Financial Officer
020 7239 8400
VP Investor Relations
020 7239 8427
Martin Robinson / Olivia Peters
020 7353 4200
1. Consensus for the year ended 31 March 2021 is adjusted profit before tax is £175.2 million within a range of £171.1 million - £179.8 million (source: Electrocomponents.com/investors/analyst-coverage).
2. Like-for-like revenue change is change in revenue adjusted to eliminate changes in exchange rates and trading days year on year. Acquisitions are only included once they have been owned for a year, at which point they start to be included in both the current and comparative periods for the same number of months. 2019/20 is converted at 2020/21 average exchange rates for the period.
3. Our profit remains sensitive to movements in exchange rates on translation of overseas profits. Average exchange rates for the year ended 31 March 2021 for euro and US$ respectively were €1.12 and $1.31 respectively. Every 1 cent movement in the euro has a circa £1.5 million impact on annual profit. Every 1 cent movement in the US $ has a circa £0.4 million impact on annual profit.
4. In the year ending 31 March 2022 we expect to see a positive impact of around £9 million on revenue from additional trading days compared with the year ended 31 March 2021.
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