A burst of innovation worldwide in fields from robotics to lighting could give a boost to Premier Farnell, a big supplier of electronic components that has been struggling with weak demand, according to the company’s chief executive.
Putting a cautiously upbeat spin to a fairly lacklustre set of results for the 2012/13 financial year, Laurence Bain said there had been a small pick-up in demand over the past six weeks, driven by a measure of heightened interest in designing new products by engineering teams employed by companies around the world.
These indications of at least a mild upturn in Premier Farnell’s fortunes punctured a little of the gloom linked to a 14.5 per cent slide in the company’s pre-tax profits in the year to February 3.
The fall – to £75.7m from £88.5m in the comparable time a year earlier – is adjusted for restructuring costs, with the profits achieved on the back of sales that declined 2.8 per cent to £952m from £973.1m.
Adjusted earnings per share slipped 14.9 per cent to 14.8p from 17.4p last time, with the weak commercial performance leading to the company freezing the final dividend at 6p a share, making a final dividend of 10.4p a share, the same as in 2011/12.
Premier Farnell stocks 450,000 components from pieces of wire to semiconductors and has 2m customers globally – with most of these ordering via the internet and purchasing parts in small volumes for use in prototypes of new products.
The company is among the leaders in the distribution of components to design engineers. The industry is significantly different to that based on selling parts in much higher volumes to companies involved in the mass production of devices such as computers, and where the top players include Avnet and Arrow, both of the US.
Mr Bain was hesitant about extrapolating beyond what he said was a “small increase” on a year-on-year basis in sales in the first six weeks of the 2013/13 year.
“I am not saying that I see fewer worries [among customers] about the world economy. But I think more of them understand that devising innovative products is potentially a key to a recovery,” he said.
Among the areas of the electronics and machinery industry where Mr Bain has noticed an improvement in demand is robotics. Here, companies such as ABB of Switzerland and Kuka of Germany are trying to devise new automated manipulators featuring, for instance, improved sensing so the devices can in some cases “see” what they are doing.
Lighting design is another area where more companies have been placing orders, with some of the innovation driven by the use of light emitting diodes – a relatively new class of light source that often requires specialised control gadgetry.
Because Premier Farnell’s customers invariably need their components delivered on the same day as they make an initial inquiry, the company has a wafer-thin order book, making it hard to judge what might happen even over the next few months, Mr Bain said.
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