LONDON Sales at the Premier Farnell distribution group have been down in the first half of the financial year to the end of July.
Operating profit was down £2.2million compared with prior year as a result of the reduced contribution from BuckHickman InOne but that divisions contribution is expected t improve to be ahead of prior year in second half.
A cost reduction programme is underway which is expected to have neutral impact (after severance costs) this year and result in an estimated £2.7million net savings in the next financial year.
Voluntary termination of Premier Farnell's registration with the SEC expected to take effect on 29 September 29, 2005.
Sir Peter Gershon, Premier Farnell's Executive Chairman said, “Overall, Premier Farnell’s performance in the first half of this year has been lacklustre, although year-on-year sales growth in the second quarter was marginally ahead of that in the first quarter.”
The business has maintained sales levels in North America, but continues to see some pressure on gross margins as a result of increased competition. In the UK, whilst the market has deteriorated further, sales slowed less as CPC’s recovery began to gather momentum. In mainland Europe, the business continued to perform well throughout the half, growing sales by 6.5% and maintaining healthy margins, in spite of patchy market conditions.
Gershon assumed executive responsibilities for the group on 4 July, and said, “In this role, my priorities are threefold: to find a new Chief Executive, to maximise the Group’s performance in this financial year, and to put in place a robust budget for the next financial year.”
“Whilst I expect the new CEO will review the Group’s strategic priorities, I believe that there is a considerable amount that can be done in the meantime to improve the medium-term performance of the Group. We are therefore taking action to reduce costs primarily through a redundancy programme across the Group that will be substantially completed by the end of the third quarter.”
“I am also putting in place stronger disciplines to encourage the allocation of capital and resources to support the key initiatives that are currently underway within the businesses, namely to prepare for the RoHS legislation, to achieve continuous improvement in service levels, and to increase the proportion of the Group’s sales transacted through eCommerce.”