LONDON Premier Farnell has seen a steady growth in most of its businesses with group sales for the year ended 30 January of £776.7million up from £764.6million the previous year while sales per day increased 6.4% on the prior year. In the fourth quarter, sales were £185.0million up 4.7% year on year and 2.1% above those in the third quarter.
The continued weakness of the US dollar against sterling impacted the Group’s financial results and at constant exchange rates, the sales increase in the year was £47.6million and in the fourth quarter was £9.0million.
The Group's gross margin for the year was 40.5% (2003/4: 40.2%) while operating profit was £73.8million (2003/4: £69.0million), producing an operating margin of 9.5% (2003/4: 9.0%). The operating profit was affected by a reduction in the net pension credit of £1.3million and a £0.8million increase in depreciation following the roll-out of the customer relationship management (CRM) software.
At constant exchange rates, the increase in adjusted operating profit compared to the prior year was £6.5million, representing a rise of 9.3%.
Most of the markets in which the Marketing and Distribution Division (Newark InOne; Farnell InOne; BuckHickman InOne; MCM, an InOne company; and CPC) operates showed some improvement during the first half of the year. This trend was led by North America, where the rate of growth peaked in the early summer. The North American market was showing only very limited growth by the year-end. During the year, Farnell InOne continued to achieve market share gains across European markets despite the slowdown in the growth rates in these markets in the latter part of the year.
E-Commerce sales grew strongly during the year, up 56% on the prior year and in the fourth quarter, eCommerce sales accounted for 18% of sales in the Americas and 17% of those in the Europe and Asia Pacific region. There are now 378 live eProcurement partnerships across the division, up from 282 at the start of the year.
The group's UK operation has sales for the year of £256.8million a sales per day decline of 1.5% in the year. Farnell InOne UK grew sales by 3.8% in the year, whilst sales in the fourth quarter were flat year-on-year. CPC’s sales for the year declined 1.6% as market conditions became more difficult during the second half amongst its small business customers, many of whom serve the retail market.
Sales at BuckHickman InOne were down 5.8% blamed on the rapid expansion of its business in 2003/4 contributing to a decline in customer service which was still evident at the start of the financial year. Restoring service to the Group’s standards was achieved by the end of the first half, but it took some time for customer confidence to be restored.
During the year, the partnership of BuckHickman InOne, Farnell InOne and CPC, achieved a 12% rise in sales to corporate account customers in the UK.
Sales in mainland Europe performed well, up 9.9% in the year and up 6.5% in the fourth quarter. Whilst markets were patchy in the fourth quarter, the business continued to deliver strong sales growth in some regions including Germany and Italy.