LONDON Premier Farnell results for the financial year ended January 29 showed a small growth up to £814.0million (2004/5: £776.7million), up 3.3% or 2.4% before acquisitions. The fourth quarter showed more reason for optimisim as sales were £208.4million (2003/4: £185.0million) up 7.9% year on year, or 6.3% before acquisitions.
As the number of working days varies a better metric is sales per day and in fourth quarter these were up 8.8% for the Marketing and Distribution Division (MDD) in the Americas, up 2.8% in the U.K., up 12.4% in mainland Europe. Industrial Products Division (IPD) sales per day in fourth quarter up 15.1%. Underlying operating profit of £19.6million in fourth quarter 17.4% ahead of prior year, with underlying return on sales up to 9.4% (2004/5: 9.0%)
The operating profit was impacted by a £3.9million reorganisation costs related to restructuring of BuckHickman InOne, and a £6.6million provision for obsolete and slow moving non-compliant inventory resulting from RoHS legislation.
For the full year the gross margin for the Group was 38.9% (2004/5: 40.5%) and operating profit was £60.3million (2004/5: £72.5million), producing an operating margin of 7.4% (2004/5: 9.3%).
Sir Peter Gershon, Executive Chairman, said, “The Group had an encouraging close to the year, delivering solid growth in both sales and underlying operating profit in the fourth quarter. Results in the quarter benefited from the full effect of the cost reduction programme during the third quarter.”
“Growth in the North American electronics market helped MDD Americas record its best quarterly sales increase of the year. Importantly, this was achieved whilst exercising tighter control over the quality of its business and stemming the gross margin erosion seen earlier in the year. The electronics market in the U.K. began to stabilise after three very difficult quarters and Farnell InOne continued to perform well. In mainland Europe it substantially out-performed the underlying markets, growing sales by 12.4%.”
“Actions taken in the second half of the year to improve the Group’s performance have started to be rewarded as underlying return on sales increased sequentially in both the third and fourth quarters.”
Gershon believes the most recent results provide a stronger foundation from which Harriet Green, who joins the board on April 3 as Chief Executive, can pursue the opportunities available to the Group. As previously announced, on this date I will revert to the position of non-executive Chairman.
Reported profit before taxation in the year was £38.1million and, excluding the finance charge of £8.2million for the Company’s convertible preference shares, profit before tax was £46.3million (2004/5: £59.0million). Reported profit before taxation in the fourth quarter was £3.3million and, excluding the finance charge of £2.1million for the Company’s convertible preference shares, profit before tax was £5.4million (2004/5: £13.3million).
In the fourth quarter, eCommerce sales were up 27% on the prior year and accounted for 21% of the division’s sales.
In the U.K. CPC continued its strong recovery as sales rose 10.3% in the quarter. Sales for the twelve months were up 1.9% over the prior year, having started the year down substantially.