LONDON — Electrocomponents plc has seen a revenue decline across all the group's regions in in half year ended Sept 30 which it says reflects the difficult worldwide economic environment but says the present sales trend is encouraging.

Group revenue down 15.3 percent (at a constant exchange) at £447.2million (about $745 million) with the international business declining by 16.6 percent (5.1 percent reported decline) and the UK declining by 12.8 percent. Sales were also down during the first half in all regions with a first quarter decline of 17 percent being followed by a 13 percent decline in the second quarter.

Group gross margin was also hit, going down by around 0.6 percent from the first half last year with a stable gross margin in the International business and a reduction in the UK, principally reflecting improving price competitiveness, increasing customer discounts due to the stronger performance of larger customers and foreign exchange.

Operating profit was £27.2million (about $45 million), a decline of 45.6 percent at constant foreign exchange . Pre tax profit of £24.8million (about $41 million)was also 41.2 percent lower than the first half of last year principally due to the impact of the group sales decline and high operating leverage which was only partially offset by lower operating costs and lower interest costs.

One bright spot is that the group continued to deliver a strong cash flow of £42.7 million (about $71 million), up 11 percent on the first half of last year with a cash conversion ratio of 250 percent. The main contributors to the group's free cash flow were the net working capital inflow of £18.8 million (about $31 million) and capital expenditure at less than half of depreciation and amortisation. Within working capital, stock turn was maintained at 2.8 times and debtor days were reduced by four days year on year. The first half cash flow was favourably impacted by around £15 million (about $25 million)due to the stock reduction programme which commenced in the final quarter of the previous financial year.

The international business now represents 66 percent of the group's revenue. The business comprises three regions: Continental Europe (53 percent of International business revenue), North America (30 percent) and Asia Pacific (17 percent).

Sales in Continental Europe at £156.6 million (about $261 million) declined in the half year by 15.5 percent reflecting the difficult economic conditions across the region. However, the decline lessened as the half year progressed.

Electrocomponents says the present sales trend is encouraging, which gives it confidence in the out-turn for the full year. Group sales declined by 17 percent in the first quarter, by 13 percent in the second quarter and by around 8 percent in October. This trend was seen across all regions. In October, sales declined by around 8 percent in both the UK and International. Within International, Continental Europe declined by around 8 percent, North America by around 11 percent and Asia Pacific by around 4 percent.

During the first half the group has reported success for its large customer acquisition program with nine new accounts won across the UK and Europe. It has targeted industries where performance has been more robust in the current economic environment including utilities, food production and alternative energy.

In addition five new websites launched in Eastern European markets with local language and pricing. e-Commerce revenue increased by 3 percent in the first half and the group's e-Commerce share of revenue increased from 34 percent to 41 percent, year on year and exited at 43 percent, with the UK and Continental Europe exiting with an e-Commerce share around 50 percent.

The prices of over 80,000 electronic components have been changed in the UK and Continental Europe to ensure that the group has competitive pricing at all volume levels.

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