Profit Plunge Prompts Premier Farnell Review
A comprehensive review of operations is under way at Premier Farnell after the UK-based distributor warned first half pre-tax profits would be 10 per cent down on last year.
The group’s sales per day growth has drooped from the 5.4 per cent in Q1 to a forecast 1.2 per cent in Q2 particularly with both North American and UK markets suffering.
Excluding Raspberry Pi, Group sales per day growth is expected to be 0.8% in the second quarter, compared to 1.9% in the first quarter.
European sales growth declined to 2.2% in Q2, with a lower level of growth in Continental Europe, notably in the key markets of Germany and France, although this was partially offset by continued double digit growth in Spain and Italy. Americas sales growth slowed to 0.4% in Q2, impacted by a weak June performance.
Sales growth in APAC declined to 10.6% in Q2 driven by a deceleration in most markets and lower level of Raspberry Pi sales.
CPC and MCM delivered negative growth of -1.6% in Q2 following the strong Q1 sales performance related to the launch of Raspberry Pi 2 in Q1.
Akron Brass sales declined 4.7% in Q2, an improvement on the prior Quarter’s performance of -6.1%, as contracts which were postponed in Q1 are starting to be fulfilled. Based on the strengthening order book, we anticipate that Akron Brass will return to growth in the second half.
Laurence Bain, Group Chief Executive, commented: “Despite implementing a number of initiatives to drive sales and expand our gross margin, we have been impacted by a slowdown in and a more difficult trading environment since we reported our Q1 numbers. Although we continue to focus on delivering the cost savings identified in our global operating model, given the recent weakness in some of our core markets and prevailing exchange rates, we now expect adjusted operating profits in the second half to be at similar levels to those in the first half (excluding the benefit of the £2.0m provision release).
In light of these challenging trading conditions, the Board has recently commenced a review of the Group’s operations and will provide an update on this review in September as part of the interim results announcement.”