Electrocomponents Plc’s interim results do little to dispel the recessionary gloom with net profits down 12.9% to UKP21m on turnover that fell 3.2% to UKP188.2m from UKP194.5m. The company says that reduced profits are due to poor trading at Misco and and Pact, in addition to the start-up costs of RS Components in Germany and Misco in France. Total sales at RS increased but only because of the inclusion of RS Australia and Verospeed. In the UK, sales were no higher than the equivalent period last year, and although Verospeed UK has suffered during the recession, Electrocomponents says that Verospeed France and Australia showed strong growth, while Verospeed Germany met its initial targets. Completion of Phase II warehouse development at RS in Corby, which doubles capacity, was completed within budget and time and is about to enter full production. RS is now publishing its catalogue in two parts – Electronic and Electrical Products and Mechanical Products and Tools. Misco, also a catalogue operator, saw no change in turnover with the recession affecting performances in the UK and Sweden, but strong performances in Italy and Germany. Misco France and Misco Spain performed below expectations and the US subsidiary incurred losses, again attributed to the recession. Electrocomponents intends to reduce costs and implement senior management changes. In the UK, Pact Distribution’s sales fell during the six months, and the company reported a loss – also due to that R word. Mesa Distribution in the US was sold on October 8 for $3.075m and the estimated loss on realisation of UKP0.5m is included in the results as an extraordinary item. Also in the UK, the ElectroLighting Group has been closed and the assets fall within last year’s provisions. Despite no signs of improvement within the UK marketplace, Electrocomponents says that tight asset control has resulted in a positive cash flow with net borrowing at UKP16.2m including UKP8.1m of loan notes of which UKP5.5m are non-interest bearing, a gearing of 13.7% compared with 25% this time last year. The shares didn’t take it well, slipping 7 pence to 249 pence.
