Electrocomponents’ full-year pretax profit falls 5 pct
May 21 (Reuters) – Electrocomponents Plc, a British distributor of electronic products for engineers, reported a 5 percent fall in full-year pretax profit, hurt in part by subdued performance in the UK, its second-largest market.
Shares in the company fell 6 percent in early trading on the London Stock Exchange, making the stock the biggest percentage loser on the FTSE 250 Madcap Index.
The company, which distributes 500,000 products, sourced from over 2,500 suppliers, said its pretax profit fell to 96.1 million pounds ($149.2 million) for the year ended March 31, while underlying sales rose 3.5 percent to 1.27 billion pounds.
Fewer trading days and adverse currency movements reduced reported sales by 50 million pounds, the company said, while the strength of the pound against the euro hurt headline pretax profit by 6 million pounds.
Increased discounting and adverse currency movement hurt revenue and gross margins in the UK, which accounted for about 29 percent of the company’s revenue in 2013.
Full-year underlying sales in the UK slid 2.4 percent to 363.8 million pounds, falling for the second consecutive year.
When asked when the company would return to growth in the UK, Finance Director Simon Boddie told Reuters he could not provide a prediction at this stage.
“Suffice to say that they would be in decline for some time now,” he said.
Underlying international sales rose 6 percent to 902.4 million pounds. Electrocomponents earns 70 percent of its revenue from outside the UK.
Electrocomponents said on Thursday that Simon Boddie would step down as finance director at the end of September.
“Challenges remain for the group in terms of tough markets and its operating performance. A change of the management guard is likely to inject a fresh approach,” Sanlam Securities analysts wrote in a note.
Newly appointed Chief Executive Lindsley Ruth told Reuters that the company would begin talking about a successor to Boddie next week and evaluate both internal and external candidates.
Boddie told Reuters he had not yet made up his mind about his plans after his 10-year-long tenure with Electrocomponents ends.
The company said sales grew 4 percent in the first seven weeks of the new financial year.
Electrocomponents shares were down 3.32 percent at 241.1 pence at 0913 GMT.