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Electrocomponents expects easier coronavirus hit in second half

Published: 08:12 08 Oct 2020 BST

Electrocomponents - Electrocomponents expects easier COVID-19 hit in second half

Electrocomponents PLC (LON:ECM) has said the impact of coronavirus (COVID-19) issues on profits in the first half are expected to “ease somewhat” in the second part of the year.

The FTSE 250-listed company said the pandemic has led to higher costs from outbound freight charges and inefficiencies, with it incurring an extra charge of £9mln in the six months to September 30, 2020.

READ: Electrocomponents appoints former UK minister as new chairman

The electronic components manufacturer said it is making progress in simplifying its operating model to accelerate growth, which is expected to drive “significant” savings in the medium term.

The newly expanded and highly automated Americas distribution centre is now operational, while the German facility remains on track for summer 2021, it added.

In the first half of the year, Electrocomponents said its like-for-like revenue dipped by 7%, with the 11% fall in the first quarter recovering to a 4% decline in the quarter to end-September.

Analysts at Liberum Capital said they expect the group's sales to drop by 7% for the full year, with adjusted profit before tax of £163mln, in line with consensus of £165mln.

“We expect the improving sales momentum to be taken positively, albeit additional costs mean consensus unlikely to change today,” the analysts said in a note to clients

“We maintain our view that ECM is well-positioned to take market share through the cycle with its digital model,” they added.

Electrocomponents' shares added 2% to 738.5p on Thursday at the opening bell.

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