Strong results and new initiatives to drive future growth and profitability
|Adjusted2 operating profit||£177.1m||£133.2m||33.0%||28.1%|
|Adjusted2 operating profit margin||10.4%||8.8%||1.6 pts||1.4 pts|
|Adjusted2 profit before tax3||£173.1m||£128.0m||35.2%||30.0%|
|Adjusted2 earnings per share||28.4p||21.0p||35.2%||29.7%|
|Adjusted2 free cash flow||£105.1m||£117.7m||(10.7)%|
|Net debt to adjusted2 EBITDA||0.3x||0.7x|
|Profit before tax||£168.6m||£127.1m||32.7%|
|Earnings per share||33.9p||20.9p||62.2%|
- Like-for-like change excludes the effects of changes in exchange rates on translation of overseas operating results, with 2017 converted at 2018 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. Positive currency movements increased revenue by around £22 million, fewer trading days reduced revenues by around £21 million.
- Adjusted excludes substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax (refer to Note 10 on pages 19 to 22 for reconciliations).
- Positive currency movements increased adjusted profit before tax by around £5 million.
- 12-month rolling Net Promoter Score (NPS) is a measure of customer satisfaction and one of our Group key performance indicators.
Financial and operating highlights
- Revenue growth of 12.8%, with all five regions seeing double-digit like-for-like growth
- Digital like-for-like revenue growth of 13.4% and RS Pro like-for-like revenue growth of 11.3%
- Further step towards best-in-class customer experience - RS Net Promoter Score4 45.7 (2017: 42.1)
- Gross margin rose to 44.0% (2017: 43.4%), driven by both mix and progress on price and discounting initiatives
- Asia Pacific moved into profit in H2, driven by strong revenue growth and tight cost control
- PBT up 32.7% and adjusted PBT up 30.0% on a like-for-like basis
- Adjusted operating profit margin of 10.4% driven by revenue growth, higher gross margin and cost control
Strong EPS, cash flow and dividend growth
- EPS of 33.9p up 62.2% benefited from a non-cash US deferred tax credit; adjusted EPS up 35.2%
- Strong cash generation led to a reduction in net debt to £65.0 million and net debt to adjusted EBITDA of 0.3x
- Recommending full-year dividend of 13.25p, up 7.7% reflecting confidence in future prospects
Performance Improvement Plan (PIP) - Phase II
During 2018 we completed the first phase of the PIP delivering cumulative annualised savings of £30 million and a significant step forward in Group profitability over the course of the plan. We are now launching a second phase of the PIP aimed at further building and enhancing the organisation model and capabilities to drive continued revenue growth and improved profitability. Our proposals, which will be subject to consultation with employees, are based on two core principles:
- New simpler regional structure, leaner centre, driving a more customer-centric organisation
- Targeting total annualised savings of £12 million by 31 March 2021, with £4 million in year to 31 March 2019
- Global shared services and automation strategy to drive improved service at lower cost
In line with our strategy to build out our value-added service proposition, Electrocomponents is pleased to announce the acquisition of IESA for £88 million. IESA significantly enhances the Electrocomponents value-added service proposition giving it additional capabilities to service corporate customers in areas such as sourcing, transaction process and inventory and stores management. As part of Electrocomponents, IESA and its clients will benefit from the scale and international spread of the broader Group, which should enable IESA to grow revenue at a faster rate. The transaction is expected to be accretive to Group earnings per share and meet our cost of capital in its first full year of ownership.
Current trading and prospects
We have made an encouraging start to 2019, with strong revenue growth in the first seven weeks of the year despite tough trading comparatives. All our regions continue to see good revenue growth and market share gains. We are accelerating initiatives to create a leaner and more efficient operating model, which means that we are well positioned to continue to make good progress in the year ahead.
Lindsley Ruth, Chief Executive Officer, commented:
"2018 has been a year of strong progress and significant growth in revenue, profitability and earnings. Our Performance Improvement Plan has delivered a major step forward in our quest to become first choice for customers, suppliers and employees but the opportunity for further growth and improvement still remains significant. Today we are launching a new phase of the improvement programme to ensure we fully capitalise on this exciting opportunity."
|Lindsley Ruth, Chief Executive Officer||Electrocomponents plc||020 7239 8400|
|David Egan, Group Finance Director||Electrocomponents plc||020 7239 8400|
|Polly Elvin, VP of Investor Relations||Electrocomponents plc||020 7239 8427|
|Martin Robinson / Lisa Jarrett-Kerr||Tulchan Communications||020 7353 4200|
The results statement and presentation to analysts are published on the Electrocomponents website at www.electrocomponents.com.
Notes to editors:
Electrocomponents, through its trading brands RS Components (RS) and Allied Electronics and Automation (Allied), is a global multi-channel distributor. We offer more than 500,000 industrial and electronic products, sourced from over 2,500 leading suppliers, and provide a wide range of value-added services to over one million customers. With operations in 32 countries, we trade through multiple channels and ship over 50,000 parcels a day.
We support customers across the product life cycle, whether via innovation and technical support at the design phase, improving time to market and productivity at the build phase, or reducing purchasing costs and optimising inventory in the maintenance phase. We offer our customers tailored product and service propositions that are essential for the successful operation of their businesses and help them save time and money.