Electrocomponents begins restructure after disappointing first half

Electronic products distributor Electrocomponents has launched a major performance improvement plan after a disappointing first half performance.

In the six months to the end of September, the group said its profit before tax declined 19.7% year-on-year to £31.3m, with 8% of it due to adverse currency movements.

Currency headwinds also weighed on gross margin, contributing 1% to a total 1.7% decline, the FTSE 250 company said on Thursday.

Sales grew 3.7% year-on-year in the period to £626.5m, as a solid 6% growth at the group’s international operations offset a sluggish six months in the UK, where sales slipped 1% from the corresponding period in 2014.

Following the disappointing results, Electrocomponents said it would implement a performance improvement plan which is expected to deliver annualised cost savings of approximately £25m, with £6m coming in the fourth quarter of the current financial year.

"We have taken firm action on costs, appointed new management and made some tough decisions on IT,” said group chief executive Lindsley Ruth.

“We have a clear plan, strong financial position and an energised leadership team that are determined to deliver a sustained improvement in financial performance and the opportunity is huge."

Investors were encouraged and the shares climbed 3.7% to 236.7p by 0845 GMT on Thursday.