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Premier Farnell Reports Q3

LONDON — Financial Highlights

• The momentum from the prior quarter has continued into the third quarter with Group sales growing 23.3% and Group operating profit up 48.5%, despite tougher year on year comparators.
• MDD sales grew 25.2% year on year, with the sales momentum at MDD Americas accelerating in the third quarter where sales grew 22.1% year on year and 1.6% on the prior quarter.
• MDD Europe’s sales grew 34.4% year on year, with third quarter sales per day at the highest ever level achieved by the business. Strong growth in Asia Pacific has continued with sales up 31.0% year on year.
• Gross margin has improved for eight consecutive quarters, up 0.3 percentage points on the prior quarter to 41.1%. Gross margin has now remained stable for twenty consecutive quarters, a performance unrivalled in the electronics distribution industry that is indicative of the value that customers attribute to our service.
• Group third quarter underlying return on sales was 11.3%, up 2.1% year on year, with North America’s underlying return on sales doubling year on year. Excluding the £2.8 million of one-off incremental operating expenses incurred in the third quarter of this year, the Group’s underlying return on sales was 12.4% which is within our target range of 12%-15%. Underlying earnings per share grew 76.9% year on year.
• Operating cash conversion in the quarter was 99.6%, as our strong cash generation funded the continued targeted investments in inventory.

Strategic Highlights

• All of our Asia Pacific businesses were rebranded as element14 in the quarter, taking an evolutionary step forward in our transformation to revolutionise our Asia Pacific proposition through the fusing of commerce, community and business under a single brand.
• Our global EDE sales grew 41.0% year on year, a 21.2 percentage point outperformance of the wider market, and our MDD active customer base grew 7.6% year on year. Both clear indications of our market share gains.
• The strength and scale of our element14 community has led to over 400,000 customers visiting the site in the quarter, with the purchase conversion rate for customers visiting element14 16.6% percentage points higher than the conversion rate on our global transactional websites.
• Our EDE sales in the third quarter accounted for 52.1% of sales from MDD Europe and Asia Pacific and MDD Americas. In North America progress to increase sales mix towards the EDE sector continued, with EDE sales now accounting for 38.1% of the region’s total third quarter sales.
• Third quarter MDD web sales grew 46.0% year on year, with eCommerce accounting for 48.1% of MDD sales. eCommerce in Europe and Asia Pacific accounted for 63.1% and 55.6% of sales, respectively. Our transition to the web in North America continued to accelerate in the quarter with eCommerce accounting for 35.8% of sales.
• Sales from our developing markets continue to grow strongly and for the quarter sales in Greater China grew 83.2% year on year. Sales in India and Eastern Europe grew 55.0% and 71.0% year on year, respectively.
• After exceeding the company’s employee engagement targets, the Group was accepted into the Towers Watson High Performance Company Elite Group – characterised by industry leading levels of return on invested capital and employee engagement.

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