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Premier Farnell rallies as it identifies cost savings

Published: 09:58 17 Dec 2015 GMT

RaspberryPi
Raspberry Pi ... now that's a hand-held computer

Electrical components distributor Premier Farnell (LON:PFL) achieved the rare feat of seeing its share price rise after a downbeat outlook statement.

The company, which has seen its share price almost halve this year after a profit warning in July and the decision in September to cut the dividend, said full-year operating profit is likely to be at the lower end of its guidance range.

That's not quite a profit warning, which counts as a plus in the eyes of a sceptical market, and the shares were up 6.6% at 97.25p in mid-morning trading.

Investors took heart from signs of life on the sales front, with sales per day in the fiscal third quarter (August – October) rising 0.5% year-on-year, although sales would have been down 2.3% were it not for sales of Raspberry Pi, the cheap computer aimed at encouraging students to learn programming and find out what's under the bonnet of a computing device.

The company also flagged up a strong performance by Akron Brass, which it is in the process of selling.

The keenly anticipated operational review has been completed and has identified annual cost savings of £19mln, including £7mln of savings previously identified and announced.

Premier said the estimated one-off cost of achieving these cost savings would be around £10mln, most of which would kick in during the next financial year.

The global search to identify a permanent chief executive officer is in progress, with both internal and external candidates
being considered.

Meanwhile, Mark Whiteling, interim chief executive officer, said: “Our results in the quarter are a reflection of the challenging conditions in the UK and US; however, we are encouraged by the strong growth we continue to see in the APAC region.

“The outcome of the operational review, announced today, has identified a number of efficiency and margin improvement initiatives which will position the group to deal with the margin pressures that it has experienced in recent times. The board is confident that the combination of these initiatives will provide the platform for future growth. ”

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