Premier Farnell sees signs of improvement -

Premier Farnell sees signs of improvement

London, UK — In its financial year which ended 1st February 2004, Premier Farnell saw group sales rise slightly to £764.6million from £759.0million in the previous year while sales per day increased 3.5% on the prior year.

John Hirst, group chief executive, said, “Whilst our markets remained subdued for most of the year, signs of recovery emerged during the fourth quarter. In North America, after a 3.3% rise in sales per day for the fourth quarter, rates in the final weeks of the quarter were nearer 5% ahead of the prior year. In the UK, trends were less pronounced, but still positive. On mainland Europe, we continued to gain market share, although markets and performance remained patchy.”

Adjusted operating profit for the year was £73.8million (2002/3: £82.9million) before rebranding costs of £2.4million and goodwill amortisation of £2.6million

Operating profit was affected by the increased depreciation following the roll-out of the customer relationship management (CRM) software and investment in the Liège distribution centre.

Weakness of the US dollar against sterling in the year resulted in an adverse currency translation impact on sales of £27.0million. This was offset by a favourable euro effect of £11.9million, resulting in a net adverse impact on sales of £15.1million.

The company says whilst markets were generally subdued or weak during the year, they began to show signs of improvement as the second half progressed. In the fourth quarter, conditions in North America improved indicating that a steady recovery may be underway; however, its sustainability is still uncertain. Consistent growth has been achieved across the UK and mainland Europe from market share gains despite a less pronounced recovery in the UK market and patchy or weak mainland European markets.

Purchase lead-times for some specialist components and semiconductors are extending, suggesting that capacity utilization rates, although still low in many product areas, are now edging higher. The Asian markets continue to demonstrate growth.

eCommerce sales continued to grow strongly in 2003 and reached £71million. Total eCommerce sales per day for the year increased 52% over last year, with Farnell InOne showing growth of 72%. eCommerce sales in the fourth quarter accounted for 15% of sales in the Americas and 12% in the Europe and Asia Pacific region.

Business transacted through eProcurement channels rose by some 77% in North America and 200% in the Europe and Asia Pacific region during the year. There are now 282 live eProcurement partnerships across the division.

Europe and Asia Pacific sales for the year were £382.1million, with sales per day up 6.8% over the prior year. The fourth quarter sales performance was up 5.1% compared to the same period last year and 3.8% above the third quarter. Gross margins in Europe and Asia Pacific were stable, helped slightly by the strengthening euro.

UK sales through the Farnell InOne and CPC businesses were up 2.7% against the previous year, sales in the fourth quarter were up 4.2% on the prior year and 5.7% above those in the third quarter amid signs of some pick-up in the market. During the year, strong growth was achieved in major accounts and in eCommerce.

The Industrial Products Division achieved sales of £96.4million for the year, with sales per day up 5.6% on those of the prior year. Sales per day in the fourth quarter were up 9.2% over the prior year, despite weak market conditions.

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