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premier farnell_ the global catalogue distributor of electronic


									Premier Farnell plc                                                                 28 th May 2002

                                       FIRST QUARTER RESULTS
                                     For the 13 weeks ended 5th May 2002

Key Financials
                                                    Quarter 1 2002/3                    Quarter 1 2001/2
                                                    £m            $m*                   £m           $m*
Sales                                           204.3             294.2               214.7                 309.2
Operating profit before                         22.4               32.3               24.6                   35.4
amortisation of goodwill
Profit before taxation, goodwill                    18.5          26.7                 21.2                  30.5
amortisation and loss on
business disposals
Adjusted earnings per                               2.4p         $0.035                3.0p                 $0.043
NOTE: Throughout this statement all growth rates are quoted for continuing businesses and like periods at
constant exchange rates
* Equivalent US$ using £1 = $1.44 (2001/2: $1.44)

    First quarter sales up 4.5% on Q4 2001/2

    Operating margin 11.0% vs 10.5% in Q4 2001/2

    Gross margins remain robust

    eCommerce sales up 8%, year on year

    Major supply agreement with US Federal Government

    Significantly improved Group capital structure

John Hirst, Group Chief Executive said:

“We have made good progress in the last two quarters against a background of slow but stable
market conditions with, as yet, few signs of greater activity.

“Sales in almost all businesses have improved compared with the previous quarter. We have won a
number of significant contracts in North America and Europe and have continued to develop
electronic procurement relationships with large customers. As these mature and we continue to
focus on our key initiatives, we expect to outperform the market.

“The capital structure proposal, announced during the quarter and approved by shareholders in
May is a major step forward for the Company. It will improve cash flow this year, increase earnings
per share, enhance dividend cover and provide a more balanced capital structure.”

Premier Farnell plc

                          For the 13 weeks ended 5th May 2002

Premier Farnell, the leading global business-to-business distributor of electronic components and
industrial products, today announces its results for the first quarter to 5 th May for the year ending on 2nd
February 2003.

Financial Results
Group Sales
Group sales for the first quarter were £204.3million, down 0.7% compared to the same period last year.
Excluding the contribution from Buck & Hickman, which was acquired in July 2001, sales were
£180.5million, down 12.5%, reflecting the sharp decline in the North American and European
electronic components markets, which took place in 2001. However, Group first quarter sales increased
4.5% from the last quarter of 2001/2.

Margins and Costs
Gross margins remained robust with costs under tight control during the first quarter, resulting in
Group operating profit of £22.4million before goodwill amortisation (2001/2: £24.6million). This
produced an operating margin of 11.0% (2001/2: 11.5%) compared with the 10.5% margin in the final
quarter of last year. Net interest for the first quarter was £3.9million and covered 5.7 times by profit
before interest and goodwill amortisation.

Earnings per Share
Adjusted earnings per share were 2.4p (2001/2: 3.0p).

Balance Sheet and Cash Flow
Net debt was £207.6million, down from £236.4million at the end of January 2002. Operating cash flow
of £26.4million was 118% of operating profit. Working capital remained under tight control.

Capital Structure
On 17th April 2002, the Company announced an important proposal to enable preference shareholders,
for a limited period, to convert their preference shares to ordinary shares at an enhanced conversion
rate. In addition, shareholders have been given an opportunity to sell a proportion of the ordinary
shares arising on conversion at a fixed price. The proposed transaction was approved by ordinary and
preference shareholders at meetings held on 13th May 2002. The result of the proposal will be to
improve the Company’s cash flow by at least £9million in 2002/3 and further significant cash flow
benefits are expected for the foreseeable future. The new capital structure will also enhance earnings
per share, reduce financial gearing, improve dividend cover and provide a more balanced capital
structure. Details of the proposal were set out in the circular sent to shareholders on 18 th April 2002.

Market Overview
The Group’s major markets are North America, Europe, Australasia and Asia. In North America, the
market remains stable but, with the exception of some specific segments such as the defence industry,
there are, so far, few signs of significant upturn in customer activity. European markets continue to be
quiet as the electronics industry, in particular, reduces employment. In the UK, industrial market
activity appears to have maintained the gradual improvement seen in the fourth quarter of last year into
the early part of this year, but progress was slower in April. South East Asian markets have become
more active.

Marketing and Distribution Division (MDD)
First quarter sales for MDD were £176.6million, down 0.8% compared with the same period last year,
including £23.8million from Buck & Hickman. Against the fourth quarter of last year, sales were up
4.4% with progress in almost every business, despite quiet markets. Gross margins remained robust
across the division. Operating profit for the division was £20.4million, producing an operating margin
of 11.6%, up from 11.2% in the final quarter of last year.

Americas Region
Sales for the period were £87.2million, down 20% from the first quarter of 2001/2, reflecting the
unprecedented North American market decline through most of last year. Sales in the first quarter were
2.8% above the fourth quarter of last year, with Newark up 3.7%, as focused sales activities produced
some improved performance and certain sections of industry began to increase their purchases. At
MCM, however, sales continued to be weak in the first quarter compared with the same period last

Europe and Asia Pacific Region
First quarter sales were £89.4million and 27.3% above last year, including Buck & Hickman. Regional
sales in the first quarter were 6.1% above the fourth quarter of the previous year and all businesses
throughout the region showed progress. The region’s sales performance continues the improvement
seen in the final quarter of last year.

UK sales in the period were £61.5million, 50.2% above the first quarter last year, including Buck &
Hickman. At CPC, sales continued to improve and were up 10%. Compared with the last quarter, UK
sales were up 3.8% with Buck & Hickman 4.8% ahead. Farnell sales in the UK and Germany were
down 14.7% and 16.0% respectively, compared to the peak first quarter last year and were affected by
the severe decline experienced in the electronics industry.

In Continental Europe, first quarter sales were £19.9million, down 7.4% on the same period last year
but up 8.7% compared with the fourth quarter of 2001/2. Both Asian and Australian sales for the
quarter were below last year by 3.9% and 2.1% respectively, but up 16.5% and 10.8% compared with
the previous quarter.

MDD Sales and Marketing

 Global and Key Accounts
Sales to global accounts in the first quarter were lower than the same period last year by 11.5%, due to
reduced activity in the telecommunications and electronics industries. Nevertheless, progress is being
made with all accounts in many international locations. Local relationships with engineers and
purchasing managers are being strengthened and eProcurement solutions and stockroom management
services are being developed.

Intense activity continued in marketing to key accounts in all countries and a number of significant
successes have been achieved during the first quarter. In the US, Newark, the largest business of its
type in North America, has been awarded a five-year Federal Government Supply Schedule for 90,000
products from the new Newark catalogue. This contract is a major opportunity to develop new
Government business. Orders are already being received by the specially trained teams in the Newark
business contact centres and branch offices. In another important agreement, Lockheed Martin has
invited Newark staff to work closely with their own procurement personnel in the company’s North
Eastern Acquisition Centre, which consolidates electronic product purchasing for 12 locations.

In Germany, Farnell has won a valuable preferred supplier contract with Deutsche Bahn (the state
railway company) and in Southern Ireland, the business is supplying Boston Scientific with a wide
range of products from four different Group catalogues. Five more corporate agreements were signed
in the UK during the first quarter, including a five-year contract with Midlands Electricity. Those
agreements previously signed with other large customers are now beginning to generate sales.

 Segmented Marketing
In North America, the customer relationship and integrated account management programmes
continued to be rolled out in the branches and contact centres. Where training has been completed,
there has been a noticeable improvement in performance. The Mexican office was opened in May with
a dedicated catalogue launch and the sales and management teams are now established.

Focus on the education market segment has been maintained in all countries, with particular successes
being recorded in the UK, Germany and France. Significant progress in the UK health and safety
market segment has also been achieved in the first quarter with plans to apply successful practices in
other countries.

MDD eCommerce
Total eCommerce sales for the division have increased by 8.4% in the first quarter over last year, to an
annualised rate of £49million. Electronic sales are now 11% of Newark’s sales. Group websites are
primarily used by small and medium sized customers to place their orders, while larger customers, keen
to automate their purchasing processes, are increasingly using eProcurement solutions.

 Websites
In the first quarter, a further 11 country websites have been rolled out in the Europe and Asia Pacific
region to reach 18 in total. Regional web sales have increased by 80% in the first quarter over the same
period last year. There has been particular success in the Nordic countries where website sales now
account for more than 15% of total sales. Recent enhancements in the UK have increased the website
capacity for the number of simultaneous users and improved overall performance. Further customer
service and facility upgrades will soon be implemented, including fast parametric searching across the
whole product range and all 18 websites. The next generation of the web platform will be introduced
progressively over the coming 12 months to all parts of the division.

 eProcurement
The division has continued its focus on developing electronic purchasing relationships with large
customers. The introduction of the Group’s eProcurement capability to these customers frequently
removes the obstacles to a trading relationship, as the benefits of lower overall costs of procurement are
demonstrated. In North America, Newark added 14 more customers in the first quarter, including
Osram Sylvania, Square D and the University of Southern California and now has 106 live
eProcurement accounts. Arrangements with a further 60 organisations are at various stages of

In the Europe and Asia Pacific region, 31 live customer trading relationships have been added in the
first quarter, reaching a total of 72, while more than 30 organisations are in development phases. These
relationships take time to mature as customers adopt the new processes and, although eProcurement
sales are still relatively small, they have increased sharply in this quarter and represent a fast-growing
part of the division’s electronic sales.

Industrial Products Division
Industrial Products Division sales were £27.7million in the first quarter, an increase of 0.4% over the
same period last year. Compared with the previous quarter, sales were 5.1% ahead.

Akron Brass sales were 3.7% ahead of last year and 7.2% above the last quarter. The gross margin
continued to improve, as did operating profit. Order intake is greater than last year but the original
equipment manufacturing market remains quiet.

TPC Wire and Cable sales were 6.7% below last year, but 7.7% above the last quarter. All markets
continue to be quiet.

Kent sales were ahead of last year by 2.3%, and 5.9% ahead of last quarter. Most of the markets across
Europe are slow, but market share is growing.

There are indications that business conditions are slowly improving in North America, particularly in
industries where Government funding is available. However, most customers are maintaining a
cautious approach and overall activity is stable. We continue to make progress in Europe, despite the
quiet market conditions in the electronics manufacturing industry. Good results have been generated
through our focus on the most promising market sectors and costs and working capital are under tight

The Board remains confident that the Group is well positioned to benefit as soon as market conditions

Sir Malcolm Bates
28th May 2002

Cautionary Statement for Purposes of the “Safe Harbor” Provision of the United States Private Securities Litigation Reform
Act of 1995: the U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.
This Report contains certain forward-looking statements relating to the business of the Group and certain of its plans and
objectives, including, but not limited to, expected benefits and future actions to be taken by the Group in respect of certain sales
and marketing initiatives, the introduction of new IT and e-commerce platforms across the Group, future capital and ordinary
expenditures, and future actions to be taken by the Group in connection with such capital and ordinary expenditures, completion
of, and the expected benefits to be realized from, the current preference share conversion offer. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.
Actual expenditures made and actions taken, as well as expected results, may differ materially from the Group’s expectations
contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group.
These factors include, but are not limited to, integration of new information systems, continued use and acceptance of e-
commerce programs and systems and the impact on other distribution systems, the ability to expand into new markets and
territories, the implementation of new marketing initiatives, changes in demand for electronic, electrical, electro-magnetic and
industrial products, rapid changes in distribution of our products and customer expectations, product availability, the ability to
introduce new products and product lines, the impact of competitive pricing, fluctuations in foreign currencies, changes in
interest rates and overall market conditions, particularly the impact of changes in worldwide and national economies,
completion of the current preference share conversion proposal and the extent to which preference shares are converted under
such proposal.


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