Electrocomponents PLC (LON:ECM) said today that it had made a strong start to its current year, with “an acceleration in revenue growth and improved profits despite continued investment to drive future growth.”
In a trading update for its first quarter ended 30 June, the FTSE 250-listed firm said its underlying revenue growth was up 13%, with all regions seeing double-digit underlying revenue growth.
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The group – known for its Raspberry Pi mini-computer – added that the acceleration in first-quarter revenue has been driven by an increase in growth in Europe and Asia, with Asia and the Americas. in particular, having seen strong double-digit growth against a period of weak trading comparatives.
Electrocomponents said that its eCommerce business - which represents around 60% of revenues - saw first-quarter revenue growth of around 13%, with growth accelerating on the back of the step-up in investment in digital marketing initiated in the second half of last year.
The group said it remains on track to deliver £5mln of additional net annualised cost savings in the current financial year, giving a cumulative total of £30mln of annualised savings by March 2018.
Consolidation charge for single head office/digital hub
It also said it would take an exceptional charge of around £4min in the first half associated with the consolidation of its Oxford-based head office and London-based digital operations into a single head office and digital hub in London Kings Cross.
Lindsley Ruth, Electrocomponents chief executive officer, said: "We have had an encouraging first quarter and while it remains early days, it is pleasing to see our focus on the customer, improved execution and increased sales effectiveness driving strong results across the business. “
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He added: “Whilst the external macro environment remains uncertain, we have a strong platform and concrete transformation initiatives and we remain confident of delivering good progress in the current financial year."
Upgrades to consensus expectations supported
In a note to clients, analysts at Liberum Capital said: “Despite the fact that comparatives with toughen over the remainder of FY18, the impressive start to FY18 should support upgrades to consensus expectations of 3-4%.
“This is particularly true given that the company has reiterated its £5m incremental cost saving target for FY18, and that gross margins continue to remains robust”.
They repeated a ‘buy’ rating and 660p target price on Electrocomponents, shares in which were up 2.8%, or 16p to 593p in early morning trading.
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