Tough UK and US markets hit Premier Farnell

Premier Farnell sees strong growth in Asia Pacific
Premier Farnell sees strong growth in Asia Pacific

​Electronics distributor ​Premier Farnell​, which makes the Raspberry Pi mini-computer, ​said its 2016 operating profit will be towards the lower end of guidance ​following tough conditions in the US and the UK.

​The Leeds-based firm said said sales per day grew by 0.5 per cent in the three months to November 1 as ​strong double digit growth in the ​Asia Pacific region​ partially offset the slowdown in the US and the UK.​

​The group said growth was driven by strong demand for single board computers, in particular the Raspberry Pi2, as well as an improved performance at its ​fire-fighting equipment business Akron Brass.

European sales declined ​by ​0.5​ per cent​ as a result of the weak UK performance. Continental Europe grew 3.7​ per cent​ with the majority of markets growing.

Sales in the Americas (excluding Brazil), which represents 35​ per cent​ of ​g​roup revenue, ​fell 6.7​ per cent​ due to a more challenging trading environment in industrials, as indicated by weaker PMI trends and economic data.

Sales in A​sia Pacific​ grew 14.9​ per cent and the region ​showed good growth in most markets with China, ​its​ largest market, growing at 13.8​ per cent​.

​Premier Farnell said it remains cautious about the ongoing challenging industrial backdrop in the US and it expects to see margin pressure as a result of the current competitive environment.

Following an operational review, the group has identified cost savings of £19m on an annualised basis.

"We expect an improvement versus current performance of £13m in 2017, with the balance of the savings achieved in 2018," the group said in a trading update.

The benefits will cost around £10m, including severance costs o£4m and £6m in additional one-off resource requirements. These will largely be incurred in 2017.

In September​ the group announced its​ intention to dispose of Akron Brass.

​"​We have had considerable interest in the business and the process is progressing well. We are confident that we should be in a position to exchange contracts in ​the first quarter of​ 2016​," the firm said.​

​Following ​the ousting of chief executive Laurence Bain earlier this year after disappointing results, the group said the global search to identify a permanent CEO is actively ongoing with both internal and external candidates being considered.

Mark Whiteling, ​i​nterim C​EO, ​sai​d:​ ​“Our results in the quarter are a reflection of the challenging conditions in the UK and US, however we are encouraged by the strong growth we continue to see in the Asia Pacific region.

​"​The outcome of the operational review, announced today, has identified a number of efficiency and margin improvement initiatives which will position the ​g​roup to deal with the margin pressures that it has experienced in recent times. The ​b​oard is confident that the combination of these initiatives will provide the platform for future growth.”

The results for the full year ending January ​31​ will be announced on March ​17​.