Electrocomponents profits to hit top end of forecast range

Electrocomponents said it expected full year profits to hit the top end of market expectations, following a solid fourth quarter in which the UK recovery gained pace.

Encouragingly, third-quarter declines in North America eased off and continental Europe remained on the charge to counterbalance Asian declines and enable 2% growth in group fourth quarter sales and 3% for the full year.

The FTSE 250 company said the final quarter had seen further stabilisation in the gross margin, with the year-on-year decline reducing to 0.4% points, having been down 1.7% points in the first half of the year. This means, management said, that full-year gross margin should be down around one percentage point on the previous year.

This will enable full year group headline profit before tax for the full year to be published "around the top end" of market expectations, Electrocomponents said, with the consensus for full year headline profit before tax being £73.1m, while the consensus range for pre-tax profits is £71.8-74.5m.

For the quarter, the UK grew 4% and was flat at 0% for the year; continental Europe was up 8% in the fourth quarter and 11% for the full year; North America was down 4% in the final months of the year and down 2% for the year; Asia Pacific was the blot on the landscape, down 8% in the quarter and 2% for the year.

Asia's accelerated decline in the last quarter comes as a result of the significant restructuring management are carrying out in the region, which is bearing the brunt of the company targets annualised savings of £25m.

This mission remained on track, with "at least £6m" delivered in the year to March 2016.