"Electrocomponents has delivered a strong performance in a challenging year," said CEO Lindsley Ruth. "We continue to drive market share gains, invest in our organic growth opportunities and generate good cash flow. In addition, we welcomed three high quality businesses into our Group to accelerate our strategic aspirations. I am incredibly proud of how well our people stepped up to the challenge, and I thank them all."
"While we remain mindful of external pressures including ongoing cost inflation and potential supply chain shortages, we are confident that we are well positioned for a rapidly changing world. The Group has carried strong momentum into the new financial year, and we are excited about the opportunities we see through our Destination 2025 strategic roadmap to drive profitable market share growth and operational efficiencies.”
Growth driven by improving momentum throughout the year and strong market share gains
- Revenue growth of 2.5%, with like-for-like up 1.4%, reflecting strong market share gains in all key markets
- Superior availability, product and service solutions and being digitally-enabled has driven Group outperformance
- RS PRO like-for-like revenue growth of 9.7%, due to greater brand awareness and new product development
- Web revenue grew 2.4% with total digital revenue accounting for 63% of Group revenue
- Three strategic acquisitions performing in line with expectations, with integration and cross-selling on track
- Despite external challenges our Group Net Promoter Score remains high at 54.4 (2019/20: 55.7)
- We continue to improve our environmental, social and governance journey (ESG), driving higher external ratings
Profitability affected by additional costs relating to COVID-19, Brexit and inventory provisions
- Gross margin of 42.7%, down 1.0 pts relating to increased freight costs, inventory provisions and regional mix
- Operating costs included c. £19 million relating to COVID-19 and Brexit due to higher freight and cost to serve
- RISE programme to simplify and streamline the Group delivered £7 million of cost benefits
- Adjusted operating profit margin down 1.9 pts to 9.4% due to gross margin reduction and additional costs
- Adjusted profit before tax fell 17.0% on a like-for-like basis, profit before tax lower by 19.5%
- Adjusted EPS decreased 17.0%, down 18.4% on a like-for-like basis; EPS fell 20.2%
Growth in full-year dividend supported by strong balance sheet and cash flow
- 3.2% growth in full-year dividend, in line with progressive dividend policy; adjusted dividend cover of 2.0 times
- Strong adjusted free cash flow generation of £145.4 million driven largely by our focus on conserving cash
- Balance sheet strength, net debt to adjusted EBITDA of 0.5x supports, organic and inorganic strategic expansion
Current trading shows strong start to the year due to COVID-19 comparatives
In the first seven weeks of 2021/22 we have seen very strong revenue growth due to the weaker comparatives from the first COVID-19 lockdowns. Looking at our performance on a two-year view, like-for-like revenue growth remains robust and broadly in line with our annual like-for-like revenue growth in H2 2020/21. Our performance in Americas continues to benefit from a wider product range due to the extended distribution centre and change in focus by our sales teams. We are particularly pleased with the performance in EMEA given ongoing lockdowns and the logistical challenges presented by Brexit. Asia Pacific remains strong helped by the buoyant electronics market.
Well positioned for accelerating our growth strategy organically and inorganically
Our proposition is becoming increasingly differentiated as we invest further in our product and service solutions, enhance our digitally-enabled customer experience and expand our main own-brand, RS PRO. External pressures continue, such as ongoing additional costs and uncertainty relating to the pandemic, Brexit frictions, potential supply chain shortages and the translational impact from the strength of sterling. However, growth in our market share and customer numbers demonstrate our proposition is resonating with customers and we are excited about the opportunities we see to drive further profitable market share growth and deliver our medium-term goal of a mid-teen adjusted operating profit margin. The Group has an active acquisition pipeline and a strong balance sheet, although we will retain our disciplined approach to assessing opportunities. We are well positioned to make good progress in the current financial year and our expectations for strong growth in 2021/22 remain unchanged.
The full release and charts can be found here.