In a trading update for the four months to 31 January, the electronics seller said like-for-like (LFL) revenue growth across the group was 6%, with digital revenues growing 8%.
For its Europe, Middle East, and Africa (EMEA) division, LFL revenues were up 7% despite flat growth in the emerging markets segment which was blamed on lower sales of the Raspberry Pi computer system.
Revenues in the rest of the division in North Europe, South Europe, and Central Europe were up 8%, 5%, and 9% respectively.
Outside EMEA, ECM’s segments in the Americas and the Asia Pacific grew 7% and 2% in the period.
The group said that it continued to outperform the market over the period, with the 6% growth figure above average after December was impacted by the timing of the holidays.
The company’s own-brand range, RS Pro, also continued to outperform the group rate with 10% LFL growth.
Looking forward, ECM said it expected “stable” gross margins in its base business in the full year to 31 March 2019, adding that it was focused on initiatives to simplify and scale the business to generate efficiencies.
“We are on track to deliver £4mln of savings this financial year from the second phase of the Performance Improvement Plan, with cumulative annualised savings of £12mln by March 2021.”
Lindsley Ruth, chief executive of Electrocomponents, said that the firm had seen “a good first four months of the second half” despite “ongoing macro-economic uncertainty”.
“We continue to have a significant market opportunity and are confident in our ability to drive share gains irrespective of the market backdrop. Good progress is being made at building a leaner and more scalable model capable of driving higher operating profit margin”, he added.
Broker echoes upbeat sentiment
In a note to clients, analysts at broker Liberum said the firm “remains well positioned to take market share and drive margin expansion” and retained their ‘Buy’ rating and 810p target price on the stock.
The broker said the target price reflected “the significant potential for value creation from future M&A as well as further upside from the ongoing operational and financial efficiency programme”.
“The track record of the management team should be borne in mind” analysts said, citing growth in the company’s underlying earnings (EBIT) margin to 11.4% in the first half of 2019 from 6.7% in the 2015 fiscal year and an increased return on capital employed (ROCE) to 26.4% from 13.4%.
Shares were up 2.6% at 567.8p.