Financial highlights
- Robust sales per day, stable for the fourth consecutive quarter, up 0.5% sequentially, outperforming a contracting market and down only 1.6% year on year. The stronger second quarter improves year on year sales decline from 5.0% in the first quarter to 3.3% for the first half.
- SIA data indicates industry contraction of 10.4% and 10.0% year on year in the 3 months to July for the Americas and Europe (respectively) with APAC at 1.4% growth.
- Second quarter gross margin of 38.5% was impacted by actions we took to outperform the market, cyclical pricing pressures and foreign exchange. First half gross margin was 39.2%.
- Adjusted second quarter overhead costs reduced to 28.4% of sales from 29.0% in Q1, giving second quarter and first half year on year reductions of £2.1m and £6.6m (respectively) at constant exchange rates.
- Second quarter adjusted operating profit was £24.1m, with the year on year percentage decline in line with that achieved in the first quarter, giving first half adjusted operating profit of £50.1m. Foreign exchange movements reduced second quarter adjusted operating profit by £1.1m compared with the prior year.
- Operating cash generation in the first half of 131.5% (e) of operating profit, up from 94.9% in the prior year.
- Board have approved an interim dividend of 4.4p per share (2011/12: 4.4p).
Strategic highlights
- Our active customer base exited the second quarter up 1% on the prior year, excluding Raspberry Pi, with both EDE and MRO customer segments growing at a similar rate.
- Global MDD eCommerce penetration increased by 1.4 percentage points from Q4 2011/12 to the second quarter at 56.7% and exited at 57.7%.
- element14 Community received 1.7 million visits in the quarter maintaining strong progress following the peak arising from the Q1 launch of Raspberry Pi, with registered users increasing by more than 4,000 per month and now approximately 80,000 community interactions each week.
- Sales to international growth markets represented 22.5% of second quarter MDD sales with emerging markets increasing to 8.6% of the total.
- Raspberry Pi sales in the quarter of £3.9m, ahead of expectation, 90% of which was to 118,000 new customers.
- Our multi channel sales transformation continues with our Krakow contact centre on track and on budget.
- Embest acquisition in the quarter extends our service offering through embedded system design capabilities.
Commenting on the results, Laurence Bain, Group Chief Executive, said:
`'In very challenging global markets we continue to show resilience and make strategic progress. At a global level we have now had four consecutive quarters of stable sales per day within a market that continued to decline.
With our customer base increasing further in the second quarter and our year on year sales performance improving from Q1 to Q2 in Europe and the Americas -
the business continues to perform well on a comparative basis. The second quarter gross margin percentage was consistent with actions we have taken to outperform the market and the current market circumstances. As markets recover we anticipate our gross margin returning to our longer term average range. In challenging markets we once again demonstrated our ability to manage our costs to maintain overall return on sales above 10%.
Despite the global markets remaining uncertain and with very limited forward order visibility, I am confident that the Group is well positioned to leverage opportunities in our target markets. In August we were encouraged by the return to year on year growth of 0.4%. 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.''
