Electrocomponents sales down, gross margin stable

graeme at 7:43 a.m. Fri 17 Jul 2009

Electrocomponents’ revenues have declined steeply, down 17% year-on-year in the first half, as should be expected from a cyclical. Gross margins have remained stable, but the company has not commented directly on operating margins, which is where the concerns lie — but the £15m of cost savings (most significantly 500 redundancies) it now expects to deliver this year should make a significant difference given sales are now under a billion a year and given last year’s pre-tax profit of £96m.

The other significant things happening at Electrocomponents is the continued shift to on-line sales, which now generate 40% of group revenues, and continue to grow fast in some markets (up 60% in North America).

Like many companies under current circumstances, Electrocomponents stresses the availability of borrowing facilities that are “committed” — in other words, the company can borrow if it needs to. This also servers as a re-assurance on its financial strength as it is assumed that lenders would not offer facilities except to stable companies (now that lenders have re-discovered caution).

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