Electrocomponents fizzes off to strong start
RS Group
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16:40 03/05/24
Electrocomponents, the electricals and electronics distributor, fizzed to a strong start in its new financial year as sales growth accelerated across Europe and Asia Pacific.
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For the first quarter to end-June, the FTSE 250 group confirmed that the strong momentum at the end of last year has continued, with 13% underlying sales growth for the group as a whole.
The company, which cautioned that comparative growth versus last year for all regions will toughen as the year progresses, said profits also improved despite continued investment in the business to drive future growth.
Although he cited an economic environment that "remains uncertain", chief executive Lindsley Ruth said management was confident of "delivering good progress in the current financial year".
"We have had an encouraging first quarter and while it remains early days, it is pleasing to see our focus on the customer, improved execution and increased sales effectiveness driving strong results across the business."
European sales increased 11%, up from the 5% growth in the final quarter of its prior year to March.
Asia and emerging markets saw sales surge 18%, up from 9%, while growth across the Americas remained at an impressive 16%.
Gross margin is expected to be broadly stable in the quarter compared to the previous year and at a similar level to that seen in the first half of the last fiscal year, with foreign exchange benefits offsetting both an unfavourable product and geographic mix during the period.
As part of a focus on efficiency, the business was reported to be on track to deliver the £5m of additional net annualised cost savings for the year, to take the cumulative savings to £30m by March 2018.
However, the first half will see the effect of investment made during the second half of 2017, while variable and incentive costs are also higher due to the pursuit of faster revenue growth, and additional exceptional costs will be taken to rationalise head office costs.
Broker Shore Capital retained its full year forecasts for pre-tax profit of £169m, earnings per share of 27.5p and a dividend of 13.5p per share.