UPDATE 2-Electrocomponents tops forecasts, shares at 3-yr high

Fri Nov 12, 2010 5:17am EST

* H1 pretax doubles to 50.5 mln stg vs 42.5 mln stg f'cast

* Boosted by sales in N. America, online and cost control

* Expects full-year results to beat company expectations * Shares up more than 6 pct, hit three-year high

(Adds CEO, FD comments, analyst, shares)

By Golnar Motevalli

LONDON, Nov 12 (Reuters) - British electronics supplier Electrocomponents Plc (ECM.L) more than doubled pretax profit in the first half, boosted by online sales and cost control, and said on Friday full-year results will be better than anticipated.

Its shares jumped to a three-year high of 279.5 pence and were up 6.3 percent at 263 pence by 0912 GMT, making it the top gainer on the FTSE 250 index of mid-sized British companies .FTMC, which was down 1.1 percent.

Pretax profit for the six months to Sept. 30 rose 104 percent from a year earlier to 50.5 million pounds, well ahead of the 42.5 million expected by analysts polled by Thomson Reuters I/B/E/S.

Revenue increased by 24 percent to 563 million pounds, said the company which sells batteries, semiconductors, cables and resistors mostly industry customers. It held its interim dividend at 5 pence, in line with expectations.

"We've seen strong underlying sales growth of over 24 percent ... all regions are in double digit growth ... That's led us to raise our expectations for the full year," Chief Executive Ian Mason told reporters on a conference call.

"Everybody is innovating on everything everywhere. You've got a proliferation of electronics, coming out of the recession there's a lot of innovation going on," he said.

Evolution Securities analyst Adrian Kearsey reiterated a "buy" rating on the stock. "There's very impressive cost control driving the operating margins on last year ... We've raised our full-year profit before tax forecast from 102 million pounds to 110 million pounds," he said,

Electrocomponents, which also sells products under the RS brand, said online sales had grown by 42 percent, led by North America, and it was on track to meet its medium-term target of developing eCommerce to represent 70 percent of revenue.

Group Finance Director Simon Boddie added the company's strong cost controls had been aided by more online sales and rationalising warehouses in Britain. "Nearly 50 pct of the business being online has huge cost benefit," Boddie said.

Mason said Electrocomponents would continue with its strategy of focusing on international sales, which now account for 70 percent of the business, and growing online sales in countries such as Poland, Hungary, the Czech Republic and China.

In September rival Premier Farnell (PFL.L) beat second-quarter forecasts, also more than doubling its profit on strong sales and growth in Asia and North America. [ID:nLDE6871P4] (Editing by Paul Hoskins and David Holmes)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.