AFDEC restricts sales forecast to six months - Embedded.com

AFDEC restricts sales forecast to six months

LONDON — For the first since its started providing a forecast for an upcoming year the U.K.'s Association of Franchised Distributors of Electronic Components (AFDEC) is unable to issue an accurate forecast for 2009 as a whole and so have only provided guidance for the second half.

This time last year AFDEC was predicting a fall of 1.8 percent in the market for components available to distributors (DTAM) for 2008. This was restated in July as a 5 percent fall and the organization says the the final quarter revealed a rapidly deteriorating situation and has now reduced the 2008 DTAM -5.8 percent

According to Aubrey Dunford who prepares the forecast for AFDEC there appears to be few signs of the poor market conditions improving significantly in the first half of 2009 forcing it to forecast a further decline in the DTAM in of around -10 percent in the first half of 2009. “It is to be fervently hoped that conditions will improve in the second half of the year and therefore AFDEC’s current expectation is for an overall decline in the DTAM in the range -4.8 percent to -7.3 percent for 2009.”

“With the continuing economic uncertainty effecting both exchange rates and interest rates and with the UK economy entering recession AFDEC believe that, for the first time in the Association’s history, it is unable to issue an accurate forecast for 2009 as a whole and so have only provided guidance for the second half.”

For 2009, AFDEC believes the DTAM will decline in the first half of the year in the range of -8 percent to -11 percent but AFDEC’s current expectation is that there will be an upturn in the second half of the year to bring the decline for the total year into the range of -4.8 percent to -7.3 percent. This means that AFDEC’s expectation is for the distribution market in 2009 to be between £920million and £945million. Last year’s forecast was a growth of 1.3 percent.

AFDEC’s mid-range expectation for the total year by product group is -8 percent for semiconductors, – 4.2 percent for passives, – 2.8 percent for electro-mechanical components, – 7.1 percent for component assemblies and – 3.4 percent for other products.

Source: AFDEC

For 2008, AFDEC says the total component market (TAM) in the U.K the will decline by 10.1 percent from £3519million to £3165million. Last year’s forecast was a decline of 5 percent. For 2009, AFDEC is predicting the TAM will decline by 9 percent from £3165million to £2880million. Last year’s forecast was a decline of 2.2 percent.

AFDEC believes that component manufacturers may continue to reduce their direct support in the U.K. and their reliance on the authorized distribution channel will increase. The will see the distributors share of the total market rise to around 32 percent whereas ten years ago it was 17 percent.

Distribution margins are likely to come under further pressure as manufacturers look for price increases in sterling to compensate for the weakness against the supply currencies. Severe price erosion may continue, especially in commodity products.

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