11 January 2022, 7.00am

Electrocomponents plc today issues a trading update for its third quarter ended 31 December 2021

STRONG TRADING PERFORMANCE WITH ONGOING MARKET SHARE GAINS

LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: "Our strong trading momentum continued into the third quarter, thanks to the exceptional effort of our people as we worked closely with our suppliers and customers in the challenging environment. Our product availability and breadth, service and solutions offer and omni-channel capabilities have driven further market share gains. As we enter Q4 we are mindful of external pressures, including the Omicron variant and supply chain constraints, although our better than expected Q3 trading means we expect full year profit to be slightly ahead of consensus estimate. We continue to take advantage of significant market share opportunities to drive further profitable growth."

Our people are driving our strong performance with Q3 revenue growth well ahead of our markets

·      Q3 like-for-like revenue growth of 21%, a strong performance despite toughening comparatives.

·      Overall Q3 Group revenue grew 23% as acquisitions added 5% and trading days 1% offset by foreign exchange.

·      Our industrial product ranges, which are c. 75% of Group revenue, grew Q3 like-for-like revenue by 20%.

·      EMEA's performance reflects a greater focus on higher returning activities and customers. Each market is taking share with the strongest outperformance in Germany driven by the new management team and sales approach. Our German distribution centre expansion will support further operational benefits going forward.

·      Americas' outperformance reflects the investment we have made in driving a more proactive, digitally focused and sales-led culture, with strong availability and a wider product offer from our expanded distribution centre.

·      Asia Pacific is delivering strong market share gains in the industrial product ranges through a refocused sales process, greater digital penetration and increased inventory holding in the region.

·      Our own-brand, RS PRO, grew Q3 like-for-like revenue by 11%, due to significantly tougher comparatives.

·      Web Q3 like-for-like revenue increased by 27%, with like-for-like digital participation of 64%.

We are delivering sustainable improvements in adjusted operating profit margin

·      Gross margin gains are being driven by a tighter pricing and discount strategy and greater product management work, partly offset by regional and product mix. 

·      Increasing average order values are supporting operating leverage and increasing returns.

·      Ongoing pressures from outbound freight, supply chain constraints and labour inflation.

Continued investment to drive market outperformance

·      Sustained investment in people, technological capabilities, product and service supports future growth.

·      One-off bonus in December to all permanent employees in recognition of their hard work and strong delivery.

·      Investigating opportunities to unlock further profitable growth and move from good to great operationally.

·      Committed to our environmental, social and governance 2030 goals and business opportunities.

·      Our cash generation remains strong, which is supporting our organic and inorganic growth ambitions.

Our full year profit performance is anticipated to be slightly ahead of consensus² estimates

·      External challenges look likely to intensify in the fourth quarter as the COVID-19 Omicron variant impacts labour availability across suppliers, customers and our own operations.

·      However, given the better Q3 trading, we expect full year profit to be slightly ahead of consensus estimates.

·      Continued progress on our journey towards Destination 2025 mid-teens adjusted operating profit margin target.

LEI: 549300KVXDURRKVWR37

Notes:

1.         Like-for-like revenue growth is growth in revenue adjusted to eliminate the impact of acquisitions and the effects of changes in exchange rates and trading days year on year. Acquisitions are only included once they have been owned for a year, at which point they start to be included in both the current and comparative periods for the same number of months. 2020/21 is converted at 2021/22 average exchange rates for the period.  

2.         Consensus for the year ending 31 March 2022 is adjusted profit before tax of £278.2 million within a range of £274.1 million to £284.3 million (source: Electrocomponents.com/investors/analyst-coverage).

3.         Our profit remains sensitive to movements in exchange rates on translation of overseas profits. Average exchange rates for the year ended 31 March 2021 for euro and US$ respectively were €1.121 and $1.308 respectively. Every 1 cent movement in the euro has a circa £1.5 million impact on annual adjusted profit before tax. Every 1 cent movement in the US $ has a circa £0.4 million impact on annual adjusted profit before tax.  

4.         We expect to see a positive impact of around £9 million on revenue from additional trading days in 2021/22 compared to 2020/21.  

Conference call details 

There will be a conference call for analysts and investors today at 8.00am GMT via an audio conference call. A replay of the conference call will be provided shortly after the event via the investor relations page of the Electrocomponents website: www.electrocomponents.com/investors  

Pre-registration link 

If possible, please pre-register for this call to join digitally (without an operator), via the following link: www.incommglobalevents.com/registration/client/9578/electrocomponents%E2%80%99-trading-update/ 

Conference call timing 

Date: Tuesday, 11 January 2022

Time: 8.00am GMT

Participant dial-in via operator 

United Kingdom (local): 020 3936 2999

All other locations: +44 20 3936 2999

Access code: 845006- Participants will be greeted by an operator who will register their details.

Replay details

A recording will be available until Tuesday 18 January 2022  

UK: 020 3936 3001

USA: 1 845 709 8569

All other locations: +44 20 3936 3001

Or access online: www.incommglobalevents.com/replay/7239/electrocomponents%E2%80%99-trading-update/  

Access Code: 790453