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ELECTROCOMPONENTS: RESILIENT BUSINESS WELL POSITIONED FOR FUTURE OPPORTUNITIES
3
June
2020
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RESULTS FOR YEAR ENDED 31 MARCH 2020
LINDSLEY RUTH, CHIEF EXECUTIVE OFFICER, COMMENTED: Electrocomponents delivered a strong performance in the year ended 31 March 2020 against an uncertain market backdrop and the impacts of the COVID-19 pandemic which started to impact trading volumes towards the end of the year. During the current crisis our focus has been to safeguard the health and wellbeing of our employees, support our communities and continue to provide a reliable service to customers and suppliers, including many operating in critical industries.
We face this new challenge with a robust balance sheet and a clear Destination 2025 strategy. Our digital leadership, global distribution network and highly committed team differentiate us. We are taking tactical action to protect profit and conserve cash, while also accelerating key strategic initiatives to drive scale and efficiency to ensure we come out of this crisis strongly and well positioned for long-term value creation.
Link to highlights here: download.publitek.com/Highlights.pdf
Continued customer focus driving further market share gains
Like-for-like revenue growth of 2.2%, driven by continued share gains with growth in all three regions
Around one percentage point negative impact on full year like-for-like revenue growth from lockdowns in March
Strong like-for-like revenue growth at RS PRO of 8.9%. Digital revenue growth broadly in line with the Group
Resilient 2020 profit performance alongside targeted investment to drive scale and efficiency
Gross margin of 43.7%, down 0.8 pts due to product mix and the launch and growth of OKdo
Adjusted operating profit margin down 0.4 pts due to gross margin reduction and increased strategic investment
Profit before tax (PBT) up 2.3%, adjusted PBT broadly flat year-on-year on a like-for-like basis at £215.0 million
Rapid COVID-19 response to support the needs of all our stakeholders
Prioritising the health and wellbeing of our people, implementing flexible working practices and safety measures
Maintaining a reliable service and ensuring supply chain continuity for customers and suppliers
Supporting our communities and frontline health workers by setting up 3D printing farms to manufacture PPE5
Strong balance sheet, liquidity and financial resilience
Net debt to adjusted EBITDA of 0.7x (2019: 0.5x), £350 million of facilities, of which £189 million are undrawn
Sufficient liquidity under a demanding range of stress test scenarios
Not currently accessing UK government furlough support for employees. No plans to access Bank of England CCFF
The Board recognises the importance of the dividend but has decided it is prudent to defer the final dividend decision until it has greater visibility. At the half year, it will review making an additional interim dividend for 2020
Well positioned for future opportunities and market share gains
Strong progress on Destination 2025 strategy to drive sustained growth and higher returns longer term
Building lean and scalable infrastructure technology upgrades and distribution centre expansion programme
Ongoing simplification in operating model to allow us to move faster and drive further significant savings
Current trading: resilient business responding to COVID-19 challenge
The supply side of our business remains robust and tightly managed with all our distribution centres (DCs) open and operating effectively. However, demand levels have been negatively impacted as the COVID-19 lockdown measures became more extensive across our key markets throughout April and May.
Group like-for-like revenue declined 14% during the first eight weeks of the new year ending 31 March 2021
EMEA saw a decline of 18% with Northern Europe declining by 19%, Southern Europe declining by 21% and Central Europe declining by 13%.
Americas saw a like-for-like revenue decline of 10%.
Asia Pacific saw a like-for-like revenue decline of 2%.
At a Group level the rate of revenue decline moderated slightly during May as lockdown restrictions began to ease in some of our key markets.
We continue to focus on measures to stabilise and improve gross margin.
The drop through impact of lost revenue to adjusted operating profit for our business is typically in the mid-thirties, pre mitigating actions.
(1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2019 converted at 2020 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. Acquisitions are only included once they have been owned for a year, at which point they start to be included in both the current and comparative periods for the same number of months. Currency movements increased revenue by £10.9 million, extra trading days increased revenue by £9.3 million.
(2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, substantial asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax (refer to Note 10 on pages 27 to 31 for reconciliations).
(3) Currency movements increased adjusted profit before tax by £0.4 million.
(4) As a result of the adoption of International Financial Reporting Standard (IFRS) 16, 2020 net debt includes lease liabilities of £56.3m and net debt to adjusted EBITDA increases by 0.2x (refer to Note 1 on pages 22 and 23 for more details).
(5) Personal protective equipment (PPE)
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