Electrocomponents revenue growth stable as it approaches year-end

Electrocomponents said on Monday that its “strong” underlying revenue performance in the first half has continued into the first four months of the second half, with underlying revenue growth remaining stable at the 14% seen in the second quarter.

The FTSE 250 company said the market backdrop remained “positive” in the four month period to 31 January, and the company continued to execute well with improvements in areas such as customer experience, digital and sales effectiveness driving further market share gains.

In the period, the board said group underlying revenue growth remained “strong” at 14%, with all of its five regions continuing to see double-digit underlying revenue growth.

On a regional basis, Electrocomponents said revenue growth in Northern Europe was 13% in the period, up from 12%, and in Central Europe it rose to 17% from 14%, while growth in Southern Europe fell to 11% from 12%.

Total underlying revenue growth in Europe remained stable at 13%, compared to 13% in the second quarter to September and 10% in the first quarter to June last year.

Elsewhere, Electrocomponents said revenue growth in Asia Pacific was 22% - a healthy rise from 17% in the second quarter - while in the Americas it fell to 12% from 15%.

The board said it saw strong momentum in digital, with 15% underlying revenue growth in the period, which it said reflected success with its digital marketing strategy and improved online experience.

A further acceleration in underlying revenue growth was also observed at at RS Pro, the company’s own-brand business, which grew at 14% during the period compared to 10% in the first half.

Electrocomponents said it remained on track to deliver stable gross margin for the full year to March.

At the end of the financial year, the company would also have completed the first phase of its ‘performance improvement plan’ and delivered cumulative annualised savings of £30m.

The board said it was currently examining new initiatives to further simplify the way it did business, and generate efficiency.

“Our performance year to date has been pleasing and we are confident of delivering strong progress in the current financial year,” said chief executive Lindsley Ruth.

“The first phase of the performance improvement plan is now complete, but we still believe we have a significant further opportunity to improve efficiency and reduce complexity allowing continued strong growth at higher operating margins.

“We remain excited by the opportunity for growth and improvement.”