Abacus profits surge but outlook remains ‘cautious’ - Embedded.com

Abacus profits surge but outlook remains ‘cautious’

LONDON — Abacus Group, a franchised distributor of electronic components in the UK, Eire, Italy, Benelux and the Nordic region, increased its profits before tax and goodwill by 25% to £10.0million (2003: £8.0m), for the year ended 30 September 2004.

Sales increased 28% to £188million (2003: £147m) with like for like sales, prior to acquisitions, increasing 9% to £160million with two acquisitions added sales growth of £28 million. During the period Abacus acquired 40% of ECC Distribution taking ownership to 100% as well as buying 100% of Telecom Design Communications for £2 million.

There has been strong performance of the core UK business, with UK market share growing to 14% and sales growth in electro-mechanical assembly businesses increased by 17%.

Harry Westropp, chairman of the Abacus group, said, “The principal reason for Abacus’ success in 2004 has been the strong performance of its core UK business. This has been achieved as the result of our focus on excellent local customer service, good logistics and a proactive approach to the introduction of new products into a changing marketplace, where we have gained new customers.”

“Overseas our performance has been uneven with a good result in Denmark being offset by downturns in our Swedish and Finnish companies. In Italy the market showed no growth over the period.”

“We remain cautious on the global economic outlook, but Abacus has entered the current year with a strong order book and a range of customer and product opportunities. The Group will continue to expand its areas of operation, both geographically and into areas of market growth. As in the year under review, this will be achieved organically and by acquisition whenever suitable opportunities arise.”

Martin Kent, Abacus chief executive, “Our gross margins in our continuing businesses were 23.8%, compared to 23.2% in 2003. Due to the lower gross margins prevalent in our industry in Europe, the acquisition of ECC during the year resulted in the Group margin for 2004 being 22.9%.”

“Headcount in our continuing distribution businesses increased by 21 in 2004. With the majority of our sales growth coming from increased activity rather than improving prices, plus our focus on attracting new customers and maintaining service levels, 80% of this growth has been in new positions within sales and marketing. Including acquisitions, our distribution headcount ended the year at a total of 605.”

“The movement of manufacturing from the UK to lower cost areas has slowed significantly, and the impact on Abacus Polar has again been minimal during the year. However, we recognise that it is still a threat to our growth and during the course of the year we have invested in additional sales personnel to find and introduce new customers into the Group,” added Kent.

“We enter the new year with a number of key parameters in our business showing improvement over the position at the beginning of financial year 2004. Our 90 day order book across the Group is up 3%, whilst in the UK and Eire distribution it is up 8%. The daily turns business, measured as new orders Booked and Billed in the same month, is up 18% in our UK and Eire distribution companies. However, whilst a number of the major semiconductor manufacturers have experienced strong growth over the past 12 months, we have seen a minimal rise in average selling prices for semiconductors and virtually no supply problems.”

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