PREMIER FARNELL PLC FY13 THIRD QUARTER CONFERENCE CALL 6 TH DECEMBER Premier Farnell plc

Transcription

1 PREMIER FARNELL PLC FY13 THIRD QUARTER CONFERENCE CALL 6 TH DECEMBER

2 REACTING TO CHALLENGING MARKET CONDITIONS Markets remain challenging in Q3 Sales per day (SPD) down 1.6% YOY, in line with decline in Q2 Gross margin (GM) and cost management remained focus areas to maintain industry leading return on sales Strong year to date cash performance continued with adjusted operating cash conversion of 111.5% for year to date Active response to the uncertain environment: Cost actions taken to optimise profitability Sales initiatives accelerated 1

3 CUSTOMER FOCUSED STRATEGIC PROGRESS High service needs Broad range of product from trusted suppliers High service delivery and customer service levels Source of trusted quality product information Support through design process Q3 progress achieved Signed global franchise with Lattice Semiconductor, adding 14k SKUs New global franchises with Deutsch, EnOcean, Anaran and Gainspan Customers tell us that we are getting even better Multichannel approach makes it even easier to transact with us Krakow call centre delivering benefits to efficiency and marketing effectiveness Award winning element14 community increasing registered users by 7000 per month to over 138,000 today Embest already providing strategic enhancements to our leading services and solutions proposition Active customer base (ex Raspberry Pi) increased by 2.3% 2

4 KEY FINANCIAL RESULTS Key Financials m Continuing operations (unaudited) Q3 12/13 m Q3 11/12 m Q3 Growth (a) 9M 12/13 m 9M 11/12 m 9M Growth (a) Total revenue % % Adjusted operating profit (b) Adjusting items (b) Total operating profit (1.7) % -3.7% 72.1 (7.9) % -33.1% Adjusted profit before tax (b) % % Total profit before tax % % Adjusted earnings per share (b) 3.4p 4.2p -19.0% 11.2p 13.4p -16.4% Basic earnings per share 3.4p 3.8p -10.5% 9.6p 17.2p -44.2% See appendix for notes 3

5 CASH FLOW m Q3 12/13 Q3 11/12 9M 12/13 9M 11/12 Adjusted operating profit Depreciation and amortisation Additional pension scheme funding (0.8) (0.9) (2.3) (2.4) Other non-cash items Working capital (8.0) (4.0) (5.3) (24.5) Cash generated from continuing operations Adjusted operating cash flow conversion 83.6% 103.1% 111.5% 85.7% Net capital expenditure (6.2) (5.7) (16.5) (16.7) Interest and preference dividends (1.1) (1.1) (10.4) (8.8) Tax (7.6) (5.6) (17.0) (20.4) Free cash flow Free cash flow % to revenue 1.5% 5.9% 5.1% 3.3% 4

6 EUROPE & ASIA PACIFIC Q3 Results Markets remain challenging. DMASS and SIA industry data down 6% and 9.4% YOY for Europe, respectively. Manufacturing PMIs weak in both Europe and APAC regions. Our Q3 SPD for Europe and APAC declined 2.2% YOY (Q2-3.3%) UK SPD declined 7.3% YOY compared to AFDEC which declined 11.1% for 3m to October. Despite softness in Germany & Southern Europe, Continental Europe SPD growth improved in Q3 to 2.4% YOY (Q2-5.2%) Asia Pacific SPD up 8.4% YOY including acquisition of Embest (Excluding Embest, sales declined 0.5% YOY) Return on sales 12.9% (2011/ %) impacted by weaker GM% and operating leverage from weaker sales environment. Q4 cost actions taken to improve return on sales Progress against our strategy Sales via ecommerce: 76.1 % in Europe, 49.4% in APAC APAC service proposition continues to improve delivering higher customer service metrics while helping to attract and retain customers. Active customer base up +10% YOY in APAC Embest integration extends differentiating services Multichannel sales strategy progress with Krakow fully operational on Pan European basis 5

7 AMERICAS Q3 Results Americas environment continues to be volatile November ISM manufacturing PMI fell to 49.5, indicating contraction SPD levels maintained flat from Q2 despite seasonality. YOY SPD trend improved to -3.6% in third quarter (Q2: -4.1%) Management focus on gross margin and stringent control of costs saw return on sales improve by 0.3 percentage points QOQ to 7.3% (2011/12 8.5%). Q4 cost actions taken to further enhance operating performance Progress against our strategy: ecommerce as % of sales at 38.9%. Investment in new web platform will enhance our web proposition from the start of next financial year Management team focused on driving sales and customer acquisition activities whilst continuing to apply stringent cost controls to maximise operating profit 6

8 MDD OTHER Q3 Results MDD Other Q3 sales up 2.5% YOY with CPC up 1.9% and MCM up 4.5% CPC sales slowed sequentially after strong Q2 sales benefitted in run up to Olympics MCM sales helped by launch of catalogue in Q3 but with customer base continuing to increase it is well positioned for future growth We increasingly leverage the benefits of managing CPC and MCM more closely, driving initiatives to increase web focused customer acquisition and introduction of new products MDD Other operating profit grew 4.2% YOY to generate a return on sales of 9.9% (2011/12 9.8%) 7

9 INDUSTRIAL PRODUCTS Q3 Results Akron Brass again delivered strong performance in Q3 as SPD increased 8.1% YOY despite weak domestic market Internationalisation strategy continues led by growth in Asia Pacific. International sales accounted for 30.8% of sales YTD New products accounted for 24.2% of Q3 sales Operating profit grew 16.6% YOY, to generate return on sales of 17.3% (2011/ %) Akron well placed to continue to execute its strategy and continue to perform strongly 8

10 OUTLOOK Markets became more challenging through the quarter and November also saw sales decline The year on year SPD trend for Europe and APAC improved slightly in November compared with the Q3 exit rate, however Americas, impacted by Hurricane Sandy, was weaker but it was just one month and we have very limited visibility Focus remains on managing gross margin to optimise overall business performance Our cash performance remains strong, demonstrating the resilience of our business model in challenging markets Cost actions in the fourth quarter will achieve annualised savings of 4m; further cost reductions will be taken if sales momentum does not improve through Q4 The continued strength of our balance sheet, our growing active customer base and the ongoing evolution of our customer proposition, all give us confidence in our ability to weather the current market challenges while building for future growth. 9

11 Q&A Your questions please... 10

12 NOTES ON FINANCIAL STATEMENTS (a) Throughout this presentation, in order to reflect underlying business performance, sales growth is based on sales per day for continuing businesses at constant exchange rates and for like periods, and growth in operating profit is calculated at constant exchange rates, unless otherwise stated. (b) Current year adjusted operating profit, profit before tax, and earnings per share in the table above exclude restructuring costs of 7.5m (in the first quarter) and acquisition costs of 0.4m related to the purchase of the entire share capital of Shenzhen Embest Technology Co Ltd (Embest) (in the second quarter). In the prior year, adjusted operating profit, profit before tax, and earnings per share, excluded the gain on sale of TPC Wire & Cable (pre-tax gain of 17.8m), the gain on sale of Newark s calibration services business of 1.1m and exclude restructuring costs of 2.8m. (c) Free cash flow comprises total cash generated from operations, excluding cash flows related to restructuring, less net capital expenditure, interest, preference dividends and tax payments. Free cash flow also excludes net proceeds from the sale of businesses. (d) SIA data from Semiconductor Industry Association publication, PMI data from relevant Purchasing Managers Index published source in each market. (e) Operating cash flow (before capital expenditure) as a percentage of adjusted operating profit. 11

13 SAFEHARBOUR This presentation contains certain forward-looking statements relating to the business of the Group and certain of its plans and objectives, including, but not limited to, future capital expenditures, future ordinary expenditures and future actions to be taken by the Group in connection with such capital and ordinary expenditures, the expected benefits and future actions to be taken by the Group in respect of certain sales and marketing initiatives, operating efficiencies and economies of scale. By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual expenditures made and actions taken may differ materially from the Group's expectations contained in the forward-looking statements as a result of various factors, many of which are beyond the control of the Group. These factors include, but are not limited to, the implementation of initiatives supporting the Group s strategy, the effect of legislation and regulatory enactments, recruitment and integration of new personnel, the implementation of cost-saving initiatives to offset current market conditions, continued use and acceptance of e-commerce programs and systems, the ability to expand into new markets and territories, the implementation of new sales and marketing initiatives, changes in demand for electronic, electrical, electromagnetic and industrial products, rapid changes in distribution of products and customer expectations, the ability to introduce and customers acceptance of new services, products and product lines, product availability, the impact of competitive pricing, fluctuations in foreign currencies, and changes in interest rates and overall market conditions, particularly the impact of changes in world-wide and national economies. The Group does not intend to update the forward-looking statements made herein. 12