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November 10, 1994


By CBR Staff Writer

The global improvement in the economy, an expansion in its product range and a variety of marketing and sales initiatives has contributed to electronic distribution group Electrocomponents Plc’s rise in profits and sales for the half year ended September 30. Operating profits were up 15% to UKP34.3m on turnover up 18% to UKP216.6m. All three of its divisions, RS Components in the UK, RS International and Pact International, which distributes electrical, audio and DIY accessories, contributed to what has been described as a robust performance. RS Components increased sales by 13%; RS International by 42% reflecting some good buys and increased presence in the market. Pact, which is the only loss-making division, cut its losses to UKP300,000, down from UKP400,000 for the same period last year while sales rose 7.1% to UKP16.6m. Pleased at its performance in the half of the year normally affected by the extended summer holidays in its European markets, London-based Electrocomponents will pay an interim dividend of 3.25p per share, an increase of 30%. It said it planned further investment in marketing schemes, even though the cost of this would put pressure on net margins. Electrocomponents said this was the way to build customer loyalty, which it quantified as the number of orders placed a year by an individual customer. And it will continue to increase the level of technical support offered customers, saying that more and more manufacturers were failing adequately to service clients once products were sold. Electrocomponents said it will be the service it offers that will differentiate it from other distributors and added that the growth in its UK market, even through the recession, showed the resilience of its strategy. Trade counters Initiatives that have contributed to this half’s healthy figures have included an increased UK product range, with 53,000 products; a rise to a 103,000 product range for European customers; a larger customer base, more than 900,000 up from 1992’s 230,000 customers; customer sales and services in the UK staying open until 8pm; courier same-day delivery in France and the UK; direct mailing of customer-oriented newsletters; exhibitions; a dedicated catalogue for mechanical engineers; and the production of the standard one on CD-ROM. This has been extremely popular and the company said that in the future this and other forms of electronic communication would be the way the company communicated with its customers. Additionally, another two trade counters in Leeds and Watford will be opened shortly, one in Lyon opened in September; a warehouse in Nuneaton is on schedule. The company said it will continue its march into the Middle and Far East, saying that it was important to get into these emerging markets early on, to become opinion makers in them and secure a good market share, rather than having to fight for a share in a crowded market. To back up its promises of increased support, an ever-expanding range of products and responsive sales staff, Electrocomponents is to invest in its own information and logistic systems.

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