SHARES in Premier Farnell leapt yesterday when the electronics distributor beat expectations in the first half of the financial year despite its profits being cut in half.
Premier Farnell, which sells thousands of components, said momentum around the release of the Raspberry Pi mini computer – which is made by a joint venture between the Yorkshire based firm and Sony – had led to sales exceeding forecasts.
Shares moved up 10 per cent despite the FTSE 250 firm saying it was cutting margins to maintain its market share. “[Sales] have outperformed industry data but pressure on margins means profits were slightly below expectations,” Peel Hunt said.
Revenue fell 3.3 per cent in the first half of the year to £479.2m while profits fell 51 per cent to £31.8m.
However, chief executive Laurence Bain said the firm had returned to growth in August, a positive sign for both Premier Farnell and the electronics industry. Since the company is a big supplier of parts for other companies, its performance is seen as a litmus test for the sector.
“In August, we were encouraged by the return to year-on-year growth of 0.4 per cent,” Bain said.
“We continue to expect growth to return in the second half. As markets recover we anticipate our gross margin returning to our longer term average range,” he added.