Electrocomponents plc has today issued a trading update ahead of publishing half-year results on 14 November 2017

Our good start in Q1 has continued into Q2, as strong execution and a positive market backdrop combined to drive faster revenue growth and market share gains across all five of our regions.

·      Revenue growth⁽¹⁾ of 13% in H1 to September 2017, with all five regions continuing to see double-digit underlying revenue growth.

o  Continued strong momentum in eCommerce with 14% H1 revenue growth.

o  An acceleration in growth for RS Pro, our own-brand business, in Q2 leading to growth of 10% in H1 revenue.

o  Trading comparatives will toughen in H2 with underlying revenue growth⁽¹⁾ trends in the year to March 2017 of 2.1% in H1 and 7.5% in H2. 

·      We continue to make good progress on our initiatives to stabilise gross margin and now expect to see a modest improvement in gross margin for H1 compared to the previous year. We remain on track to deliver stable gross margins for the full year.

·      We have invested in inventory during H1 to improve stock availability and support faster revenue growth and, as such, we expect to see a higher than normal weighting of cash flow to the second half of our year to March 2018.

·      Given stronger than expected progress to date and some benefit from translational foreign exchange⁽²⁾ we now expect half year headline profit before tax to be around £78m (H1 2017: £55.1m).

·      We are taking advantage of the strong momentum in the business to increase investment in areas such as innovation and digital in H2 to support future growth. Consequently, we now expect to see a more even distribution of profits between H1 and H2 in the current financial year.

LEI: 549300KVXDURRKVW7R37

Notes:

1)    Revenue growth rates, unless otherwise stated, are adjusted for trading days and currency movements ("underlying sales growth/decline").

2)    Our profits remain sensitive to movements in exchange rates on translation of overseas profits.  Every 1 cent movement in Euro will have c. £1.2m impact on profits. Every 1 cent movement in US $ will have c. £0.4m impact on profits. We expect to see around £5m benefit to profits from sterling weakness upon translation of overseas profits during the first half using our H1 average exchange rate of 1.29 for dollar and 1.14 for euro.  If 30 September rates were to persist for the balance of the year, we would see a benefit of around £5m upon translation of overseas profits for the full year. 

3)    During H1, we saw an adverse impact from fewer trading days which negatively impacted revenues by around £16m. In the full year we expect around a £24m adverse impact upon revenues from fewer trading days.