Premier Farnell profits softer as forecast but outlook disappoints

In the year to 31 January, adjusted profit before tax slumped 23% to £57.3m on revenue that increased 2% to £982.7m.

Adjusted earnings per share fell 20% to 11.1p and there was a sizeable 40% cut to the total dividend to 6.2p, as had been signalled.

By year end net debt stood at £243m.

But on Wednesday the company completed the sale of industrial products unit Akron Brass for $224.2m, which will reduce net debt further and enable increased focus on the electronics distribution business.

From 11 April, new chief executive Jos Opdeweegh will take the tiller, joining a company that is facing difficult trading conditions in North America and UK markets.

On the outlook, the company said it expected global market conditions to remain variable and was "not anticipating any near-term diminution in the competitive pressures on our businesses".

The focus remains on stabilising gross margin and reducing operating costs, though it was conceded that there will be some gross margin decline in the new financial year as well as the absence of the Akron.

Analysts at Peel Hunt said the new consensus outlook was for a profit range of £60-65m, with currency tailwinds an area to watch, providing around a possible 5% gain at current rates.

Shore Capital said there were few highlights in the results, though they were very close to its forecasts.

"The Premier story is now focused upon remedial action on the operating margin, restructuring the company for better performance and a return to growth. We retain a conviction that structural challenges and disintermediation remain in this market. We fear that material further restructuring charges will potentially be levied over the next two years."

Shares in PFL were down more than 7% to 113.75p not long before noon on Thursday.