International operations increase in importance to Electrocomponents - Embedded.com

International operations increase in importance to Electrocomponents

LONDON — Electrocomponents plc (Oxford, England), has seen growth in profits before tax of 9 percent to £95.4 million (about $189 million) for the year ended March 31, 2008 with an 8 percent revenue growth in international business with North America growing at 10 percent, Asia Pacific 15 percent and Europe 6 percent.

Total revenue were up 5 percent to £924.8 million (about $1,832.6 million) and sales via e-commerce grew by 16 percent and now represents 33 percent of the group's revenue.

In the first eight weeks of the new financial year the group's revenue has grown at around 2 percent year on year with the international business has grown revenue by around 5 percent while the U.K. business has declined by around 2 percent.

The group operates in 27 countries directly and another 38 via distributors with 61 percent of sales now come from international markets. The international business comprises continental Europe (56 percent of revenue of the international business), North America (29 percent) and Asia Pacific (15 percent). It sells to 1.6 million customers worldwide who are based in a broad range of service and manufacturing industries.

All the group’s regions have recorded increased gross profit. Group gross profit was up from £443.5 million (about $878.8 million) last year, to £464.7 million (about $920.8 million) this year.

The continental Europe business comprises eight separate businesses. France, Germany and Italy are the largest which in total make up about 75 percent of the region’s revenue. The five smaller businesses are Austria, Benelux, Ireland, Scandinavia and Spain. Europe has 12 locally priced catalogues and web sites and there are in total, 40 web sites across Europe including the distributor network. There are seven warehouses across the continent.

The European region grew revenue by 5.7 percent to £316.2million (about $626.5 million). All eight of the operating companies grew during the year with the Benelux and Spanish businesses performing particularly well, growing at over 10 percent.

Allied, the group’s North American business, continued to perform well, growing revenue at over 10 percent to £163.3million (about $323.5 million) during the year whilst also moving to its new premises. This is the fourth successive year that the business has grown revenue at double digit rates. It has 55 local sales offices across North America.

As a result of the sustained and strong sales growth the business was close to using all of its local warehouse capacity and it moved to significantly larger premises. This move was successfully managed through the year and involved the transfer of over 100,000 products in an eight week window whilst still shipping over 9,000 lines a day and maintaining 90+ percent service levels.

Gross margin has declined slightly due to changing product sales mix. The underlying contribution, adjusting for the impact of the weakening of the U.S. dollar (£1.3million (about $2.6 million)) and the one-off warehouse and office move (£1.5million (about $ 3 million)), increased by 6 percent to £1.4million (about $2.8 million).

The group now has a strong presence in Asia Pacific, operating businesses in ten countries together with a network of distributors servicing customers in other markets across the region. It employs around 1,000 staff in Asia Pacific, with seven warehouses which stock in excess of 70,000 product lines with a next day offer to customers.

Within Asia Pacific, all regions have delivered revenue growth with the strongest performance being in China which has grown at over 35 percent. In Japan, e-commerce now accounts for 64 percent of revenue. In South Asia, the business has been successful in targeting growing sectors while in Australia major accounts have significantly contributed to growth.

Asia Pacific's revenue was £87.3million (about $173 million) with a growth of 15.2 percent.

The U.K. has seen its second successive financial year of revenue and contribution growth with revenue up 0.9 percent to £358.0 million (about $709 million) and a gross margin of 53.1 percent.

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