Electrocomponents plc audited results for the year ended 31 March 2017: A year of significant financial and operational progress

Financial Highlights

Accelerating revenue growth

·      Underlying revenue growth of 4.8%, with reported revenues up 17.1% aided by currency and extra trading days.

·      H2 underlying revenue growth accelerated to 7.5% vs 2.1% in H1 with all hubs seeing faster H2 growth.

Improving profitability while investing to drive future growth of business

·      Gross margins rose 0.7% points, driven by actions on price, lower inventory write-downs and currency benefits.

·      Operating margins were up 2.4% points to 8.8% driven by strong sales, higher gross margins and cost control.

·      Headline PBT of £128.0 million was up 66.7% and 35.7% on an underlying basis. Reported PBT was £127.1 million.

·      Reported PBT of £127.1 million was up 264.2% aided by a year-on-year reduction in net reorganisation costs.

EPS and cash flow growth drive first increase in dividend for five years

·      Headline EPS was 21.0p, up 66.7% or 35.5% on an underlying basis. Reported EPS was 20.9p, up 318.0%.

·      Strong headline free cash flow growth of 88.0% drove a 31.6% reduction in net debt to £112.9 million.

·      Recommending full-year dividend of 12.3p, up 4.7% reflecting confidence in the future prospects of the Group.

 

Operational highlights

·      Strengthened leadership team with new Presidents hired for RS, Allied and Product & Supplier Management.

·      Market share gains in Northern Europe and North America driven by an improved go-to-market approach.

·      A major step forward in Asia Pacific with a return to revenue growth in H2 and full-year loss halved.

·      £18 million of savings delivered in 2017: on track for £30 million cumulative annualised target by March 2018.

·      Improvements in customer experience with Net Promoter Score (NPS) up 6.3% to 43.6.

 

Current trading and prospects  

We have made an encouraging start to 2018, with continued strong underlying revenue momentum in the first seven weeks of the year. All our hubs are delivering revenue growth, with North America continuing to experience strong double-digit underlying revenue growth. We are using current growth momentum to accelerate investment in talent and innovation to drive faster growth in the business in the medium term.

 

We remain on track to deliver a further £5 million of cost savings during the current financial year, leading to total cumulative annualised net savings of £30 million by March 2018. Work continues to identify further efficiencies and simplify the way we operate. All these actions mean that we are well positioned to make good progress in the year to March 2018.

 

Lindsley Ruth, chief executive officer, commented: “Over the last two years, we have significantly strengthened our leadership and begun to refocus the business back on what lies at its heart, the customer and the supplier. ‘Getting the basics right’ is now delivering strong top line growth, stable gross margins, improved efficiency, and significant growth in profits and cash flow. With a stronger balance sheet, we are pleased to return to growing our dividend. We have taken a major step forward.

 

From this stronger platform we are focussed on the next step change in the performance of this organisation. Having reconfirmed our strategic priorities and identified concrete transformation initiatives to drive future performance, we remain excited about the significant potential for further improvement and growth.”

 

The results statement and presentation to analysts are published on the corporate website at www.electrocomponents.com.

 

 

Highlights

 

2017

2016

Change

 

Reported

Underlying1

Revenue

 

£1,511.7m

£1,291.1m

17.1%

4.8%

Headline2 operating profit

 

£133.2m

£82.0m

62.4%

33.7%

Headline2 operating profit margin

 

8.8%

6.4%

2.4 pts

1.8 pts

Headline2 profit before tax3

 

£128.0m

£76.8m

66.7%

35.7%

Headline2 earnings per share

 

21.0p

12.6p

66.7%

35.5%

Headline2 free cash flow

 

£117.7m

£62.6m

88.0%

 

Net debt

 

£112.9m

£165.1m

31.6%

 

Leverage (x EBITDA)

 

0.7x

1.5x

 

 

Full-year dividend

 

12.3p

11.75p

4.7%

 

 

 

 

 

 

 

Reported profit before tax

 

£127.1m

£34.9m

264.2%

 

Reported earnings per share

 

20.9p

5.0p

318.0%

 

 

Re-presentation of gross margin4

2017

2016

Change

Reported

Underlying1

Gross margin4

43.4%

42.7%

0.7 pts

0.8 pts

Gross margin (under previous classification)4

43.9%

43.5%

0.4 pts

0.6 pts

 

(1)     Underlying growth, unless otherwise stated, is adjusted for currency movements, in addition underlying revenue growth measures are also adjusted for trading days. Positive currency movements increased Group reported FY revenues by around £140 million, additional trading days boosted Group revenues by around £10 million. 

(2)      Headline measures exclude net reorganisation costs of £0.9 million in 2017 and £41.9 million in 2016. For all alternative performance measures, refer to Note 12 on page 25.

(3)     Positive currency movements increased headline profit before tax by around £18 million.

(4)     Gross margin has been re-presented, the write-down of inventory to net realisable value had previously been included under distribution and marketing expenses, and has now been included as a cost of sales. There is no change in the underlying business and no impact on operating profit. (see further details on Page 3 under gross margin).

 

  Full details can be found at: www.electrocomponents.com/media/press-releases/2017/23052017

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