U.S. Manufacturing’s Humming—Except for Shortages and Tariffs
by 
Lindsley Ruth used to dread May, the month Electrocomponents PLC takes probing questions from investors. In his first couple of years as CEO, Ruth didn’t have a lot of positive news to share and difficult questions from analysts were difficult to answer. This May was different. Electrocomponents is on a roll. Sales and profits are growing strongly and, as if trumpeting a new dawn, the company last week announced an acquisition, the first in 19 years.
Electrocomponents CEO Lindsley Ruth
At a presentation in London on May 24, analysts who had grown doubtful of Electrocomponents’ prospects following years of disappointing performance were bowled over. The mood was infectious: Chairman Peter Johnson roamed the UBS meeting room cheerily greeting investors, a happy smile dancing on his face; CFO David Egan – soft-spoken and normally taciturn – trotted out more than a few enthusiastic adjectives as he reviewed the company’s positive financial numbers.
Egan’s presentation was glazed with rosier-than-usual projections and CEO Ruth, pumped up after announcing “significant progress” and the purchase of IESA – a value-added services provider – told the audience he was looking forward to a 2-week financial roadshow to meet institutional investors around the world.
“We’ve got all the five regions around the world accelerating performance and that was key as we went into the fiscal year that we just concluded,” Ruth said, in an interview. “We wanted to accelerate the performance not only in topline but also in profit. It goes all the way to the concept of growing profits faster than the topline, which is what investors want to see.”
It didn’t sound like the Electrocomponents of only a few years ago. In many ways, it is not. The financial figures show how far the company has gone in presenting a different image to investors. This year, it will raise dividends, a contrast to expectations for a reduction or even suspension of profit payments to shareholders. Fiscal 2018 revenue rose 12.8 percent in the year-ended March 31, to £1.71 billion ($2.3 billion) from £1.5 billion, in fiscal 2017. By comparison, revenue had risen a piddling 3.5 percent in fiscal 2015 when Ruth took over as CEO. In the latest fiscal period, profits for 2018 were £33.9 million compared with £20.9 million for fiscal 2017.
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