Electrocomponents earnings surge as Asia-Pacific moves to profit

Electrocomponents reported revenue growth of 12.8% in its final results to 31 March on Thursday, to £1,71bn, with all five of its regions reportedly seeing double-digit like-for-like growth.

The FTSE 250 company said digital like-for-like revenue growth was 13.4%, and RS Pro like-for-like revenue growth stood at 11.3%.

Its gross margin rose to 44.0% from 43.4% in the 2017 financial year, which the board said was driven by both mix and progress on price and discounting initiatives.

Asia Pacific moved into profit in the second half, which was put down to strong revenue growth and tight cost control.

Electrocomponents’ profit before tax rose 32.7%, with adjusted profit before tax 30.0% higher on a like-for-like basis.

The firm’s adjusted operating profit margin of 10.4% was driven by revenue growth, higher gross margin and cost control, the board said.

Earnings per share of 33.9p were ahead 62.2%, benefitting from a non-cash US deferred tax credit, while adjusted earnings per share rose 35.2%.

Electrocomponents said its strong cash generation led to a reduction in net debt to £65.0m, and a net debt-to-adjusted EBITDA ratio of 0.3x.

The board recommended a full-year dividend of 13.25p, up 7.7% and reflecting its confidence in the company’s future prospects.

Looking ahead, the firm said it had made an “encouraging start” to 2019, with strong revenue growth in the first seven weeks of the year despite tough trading comparatives.

All regions continued to see “good” revenue growth and market share gains.

Electrocomponents said it was accelerating initiatives to create a leaner and more efficient operating model, which it said meant that it was “well-positioned” to continue to make good progress in the year ahead.

“2018 has been a year of strong progress and significant growth in revenue, profitability and earnings,” said chief executive Lindsley Ruth.

“Our performance improvement plan has delivered a major step forward in our quest to become first choice for customers, suppliers and employees but the opportunity for further growth and improvement still remains significant.

“Today we are launching a new phase of the improvement programme to ensure we fully capitalise on this exciting opportunity.”