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Premier Farnell falls as Q2 sales decline

Published: 10:40 03 Sep 2009 BST

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Shares in Premier Farnell (LSE: PFL) came under pressure after the electronic components distributor and FTSE 250 constituent reported a 17% year on year slump in Q2 sales, sending its shares down 6.5%.


Revenues declined to £183.7 million from £195.8 million a year ago, while pre-tax profit decreased 10% to £16.2 million and earnings per share dipped 37% to 2.2p.


The sales contraction was greater than in the first quarter, when it amounted to 15%. However, Premier Farnell said sales started picking up in August, marking an improvement on the performance reported in the first and second quarters, as the rate of decline abated in Europe and Asia Pacific.


At the same time, developing international markets continued growing, as Q2 sales in Eastern Europe jumped 39%, while India posted a 99% hike. Sales in Greater China also improved, rising 5%.


The market for MRO (Maintenance, Repair and Operations) was in decline, while the share of EDE (Electronic Design Engineering) sales now amounted to 30% of the total about being minimal for over 2 years, Premier Farnell said in the statement.


The group’s gross margin increased to 39.6% from 39.4% in the previous quarter, mainly bolstered by the EDE sales as well as improving sales via web. Premier Farnell said it remained positive about its future performance, leaving the interim dividend unchanged from last year at 4.2p per share.


“With the clear validation of our strategy, another quarter of gross margin stability and our commitment to investing in our strategic priorities, the Board remains confident, that as a focused and agile organisation, the Group is well positioned for the opportunities that we face,” said Chief Executive Harriet Green.


However, any positive impact from the upbeat outlook offered by the group and the unchanged dividend was outweighed by the continued slump in sales, sending Premier Farnell’s stock down 6.5%.

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