Margins squeezed at Premier Farnell

Electronics components supplier Premier Farnell saw the year-on-year decline in its top line slow in the second quarter, as it sacrificed margin to protect market share.

In the second quarter of a financial year which runs to February 3rd, 2013, Premier Farnell's revenue eased 1.6% to £238.2m from £245.4m the year before.

Gross margin in the first half of the year was 39.2%, but retreated to 38.5% in the second quarter, reflecting pricing decisions made by the firm, as well as foreign exchange impacts.

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"As markets recover we anticipate our gross margin returning to our longer term average range," revealed Laurence Bain, Group Chief Executive.

Adjusted operating profit in the second quarter tumbled 8.9% to £24.1m from £27.5m in the second quarter of the previous year, while adjusted profit before tax fell by a fifth to £18.8m from £23.0m.

Adjusted earnings per share (EPS) declined 17.8% to 3.7p from 4.5p in the corresponding period of the previous fiscal year, while basic EPS dived by one-fifth to 3.6p from 4.5p.

"In August we were encouraged by the return to year on year growth of 0.4%," Bain said.

"We remain cautious, but by providing our customers with unparalleled service and with continued focus on optimising share gains, gross margin, costs and cash, and with easier comparators in addition to the benefit of a 53rd week we continue to expect growth to return in the second half," he added.

The interim dividend has been held at 4.4p.

JH