European Distributors See Pockets of Hope

Europe may be causing many executives to shrug their shoulders with continued uncertainty, but some distributors are making the most of the unpredictable economic spiral and ratcheting up decent financial quarters.

Mouser Electronics Inc. , for instance, recently reported strong and continuing growth with its nine European offices in Germany, the UK, Czech Republic, France, Israel, Italy, the Netherlands, Spain, and Sweden, despite the general weakness plaguing Europe.

“By adding more resources and staff members in Europe, we have helped drive further growth over an amazing 2010-2011,” said Mark Burr-Lonnon, Mouser vice president for the EMEA Business. “We’ve seen around 20 percent further growth in 2012 and gaining momentum each month, solidifying us as a key player in the European market. No question about it, 2012 is proving to be another great year for Mouser, especially bearing in mind the slowing of the market.”

To date, Mouser's sales gains on a country-by-country basis include: a 24 percent increase in France; a 27 percent hike in Spain; Benelux (a customs union for Belgium, the Netherlands, and Luxembourg) was up 58 percent; the UK climbed 19 percent; a 23 percent increase in Italy; and Germany jumped 16 percent. According to a statement EBN received in July, the company said these 2012 figures compound 2010-2011's growth of 43 percent, and combined three-year sales for Mouser soared 450 percent.

"The web continues to be a key driver of our new business, accounting for 75 percent of all new accounts and close to 50 percent of sales, which has made a major contribution and three-year increase in the European customers of over 260 percent," said Burr-Lonnon.

Premier Farnell plc (London: PFL.L) saw European sales also inch up in the recent first quarter for fiscal 2013. Although overall sales dropped five percent year-over-year, Europe had sequential growth of 2.1 percent, the company reported in June.

"Global quarterly sales per day have been maintained at a stable level since the decline in the global electronics and technology markets that impacted us in June last year," said Laurence Bain, Premier Farnell's group chief executive.

"In the first quarter, we saw sequential growth in both Europe and Asia Pacific and a reduction in the Americas as that business continues its progression from commodity to strategic MRO and EDE. Although at this stage of the cycle EDE markets remain challenging, MRO sales per day continued to progress on a year on year basis."

Others, though, like their brothers across either side of the electronics aisle -- those producing components and those selling finished devices -- have seen the opposite trend.

For example, Distributors’ and Manufacturers’ Association of Semiconductor Specialists (DMASS) -- a European non-profit organization that collates detailed semiconductor distribution market data on a quarterly basis by country and product groups such as microcontrollers, flash memories, and analog components -- said last week the regional semiconductor market remains weak.

DMASS, which consists of 35 active members and represents between 80 and 85 percent of the total European distribution market, said that although sales are coming in at a high level, second-quarter sales dropped when compared to a record 2011 quarter.

Georg Steinberger, chairman of DMASS, said in a statement: “The first half of 2012 remains weak, relatively speaking, as records of the past do not count in a competitive environment. We are still facing a very quiet market today, with uncertainties around the overall economical situation in Europe. Although the second half will be inevitably better in relative terms, 2012 won’t be a growth year either, that much is clear. 2012 will end with a small minus, provided no macro-economical problems occur.”

DMASS said: "From a regional view, the disappointment is with Western Europe and the growth fantasies are with Eastern Europe. Romania, Israel and Russia grew double-digit, the rest of Eastern Europe remained slightly positive."

It said that in Western Europe, France (-9.8 percent), UK (-10.3 percent), Benelux (-11.4 percent), and Iberia (-13.8 percent) reported a decline that was under-proportional, while Nordic (-18 percent), Germany (-21.9 percent), and Italy (-24.3 percent) dropped considerably more than average. The top five countries in sales were Germany (472 million euro; $591 million), Italy (139 million euro; $174 million), UK (124 million euro; $155 million), France (110 million euro; $137 million), and Russia (65 million euro; $81.4 million).

So, as with everything else, the story about Europe's growth potential or tumbling decline very much depends on who's telling the story.