Electrocomponents sees FY profit ahead of consensus after strong Q4
Electrocomponents said on Thursday that results for the year to the end of March 2017 are likely to be ahead of its previous expectations, with pre-tax profit ahead of the current market consensus range following a strong final quarter.
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The market consensus range for headline pre-tax profit is between £122.3m and £124.2m.
In a trading update ahead of its full-year results in May, the company said fourth-quarter revenue growth accelerated to 8%, leading to revenue growth of 5% for the full year.
It said end markets remain strong and the business is executing well, as it continues to improve its go-to-market approach and sales effectiveness. Revenues in the quarter also benefitted from a more favourable competitive environment.
The acceleration in fourth-quarter revenue was driven by a strong recovery in growth in North America and Asia Pacific, and continued robust growth in Europe.
The company said full-year 2017 revenue and profits have benefited greatly from foreign exchange and additional trading days. As previously guided, in FY 2018 it expects to see an adverse impact on revenues and profits from fewer trading days compared with 2017.
Electrocomponents said it is making good progress on its cost initiatives and is on track to deliver £18m of net savings in the year to March 2017. However, strong revenue momentum and share price appreciation will lead to higher employee-related incentive costs in the year.
RBC Capital Markets said this was a good statement overall, with earnings per share momentum continuing due to a combination of decent markets, own actions and most likely competitors in disarray post consolidation.
That said, it argued that much of this is already factored into the valuation and retained its 'sector perform' rating on the stock.
At 1430 BST, the shares were up 1.3% to 485.40p.