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Electrocomponents PLC

Electrocomponents PLC A year of revenue growth, market share gains and improved profitability

Electrocomponents PLC (LON:ECM), today announced results for the year ended 31 March 2019.

Highlights20192018ChangeLike-for-likechange
Revenue£1,884.4m£1,705.3m10.5%8.3%
Adjusted2 operating profit£220.3m£177.1m24.4%20.8%
Adjusted2 operating profit margin11.7%10.4%1.3 pts1.1 pts
Adjusted2 profit before tax3£214.5m£173.1m23.9%20.8%
Adjusted2 earnings per share37.0p28.4p30.3%26.8%
Adjusted2 free cash flow£84.5m£105.1m(19.6)% 
Net debt£122.4m£65.0m  
Net debt to adjusted2 EBITDA0.5x0.3x  
Full-year dividend14.80p13.25p11.7% 
Operating profit£201.0m£172.6m16.5% 
Profit before tax£195.2m£168.6m15.8% 
Earnings per share33.4p33.9p(1.5)% 

Continued focus on customer driving market share gains

· Revenue growth of 10.5%, like-for-like up 8.3%, strong market share gains in EMEA as well as in the Americas

· Digital and RS PRO outperformed Group growth with like-for-like revenue growth of 8.9% and 11.6% respectively

· IESA delivered strong double-digit growth and is on track to meet our cost of capital in its first year of ownership

· Driving best-in-class customer experience – Group (excluding acquisitions) Net Promoter Score4 up 5.1% to 54.0

Profitability improvement

· Gross margin rose 0.5 pts to 44.5% aided by higher margin acquisitions, up 0.2 pts on a like-for-like basis

· Adjusted operating profit margin rose 1.3 pts to 11.7%, all regions improved, with Asia Pacific now profitable

· £4 million of savings delivered and on track for £12 million of cumulative annualised savings by March 2021

· Profit before tax (PBT) up 15.8%; adjusted PBT up 20.8% on a like-for-like basis

Growth in EPS and dividend

· Adjusted EPS up 26.8% on a like-for-like basis; EPS fell 1.5% as 2018 benefited from non-cash deferred tax credit

· Adjusted free cash flow fell to £84.5 million due primarily to the distribution centre expansion in the Americas

· Strong growth in the proposed full-year dividend reflecting confidence for future prospects of the Group

Current trading

In the first seven weeks we have seen a moderation in like-for-like revenue growth. April saw low single-digit
like-for-like revenue growth, with performance impacted by the timing of holidays. However, May has started encouragingly with Group like-for-like revenue growth closer to the trends seen during Q4 2019. EMEA (64% of revenue) continues to see good growth and market share gains, which is more than offsetting softness in the Americas (26% of revenue). Asia Pacific (10% of revenue) continues to see similar trends to Q4 2019.

Investing to accelerate long-term share gains and improve returns

Over the last four years we have demonstrated an ability to outperform a highly fragmented market with a sharper focus on the customer and best-in-class capabilities. Where we see opportunity we will continue to invest to further differentiate our offer. Our customers are increasingly looking to consolidate spend to fewer partners who can offer them not just products but full inventory or purchasing solutions. We are leveraging our scale and increasing capital expenditure to around £80 million in both 2020 and 2021 to build the right capabilities and infrastructure to enable us to continue to grow profits by significantly scaling our range, improving service, increasing efficiency and accelerating market share gains so we can win new customers and continue to increase our share of wallet with our existing customer base. We expect to generate medium-term returns on this investment that are broadly consistent with Group Return on Capital Employed (ROCE) and well in excess of our Group cost of capital.

LINDSLEY RUTH, ELECTROCOMPONENTS CHIEF EXECUTIVE OFFICER, COMMENTED:

“Progress on our journey to become first choice for our customers, suppliers and employees has delivered another year of revenue growth, market share gains and improved profitability. Our opportunity remains large, our momentum is strong and we can continue to improve performance. The right investment in scalable infrastructure will deliver another step change in our progress, further differentiating customer experience, improving our efficiency and accelerating share gains. Therefore we are leveraging our strong financial position to accelerate capital investment in the strategic development of the Group to support sustainable long-term growth, whilst continuing to focus on tightly managing our operating costs in what remains an uncertain external environment. Overall, we believe we are well positioned to make good progress in the current financial year.”