SHARES in Premier Farnell, the British distributor of electronics and maintenance products, plunged almost eight per cent yesterday after the company saw sales weaken over the summer and offered a cautious outlook on its prospects.
Premier Farnell, which is seen as a bellwether of global trade because it depends on short term demand, said a two per cent fall in August sales indicated that the economic environment was still challenging.
The group, which issued a profit warning in July after its sales felt the effects of a global economic slowdown and the earthquake in Japan, said adjusted pre-tax profit for the three months to the end of July rose 0.9 per cent to £23m.
Total sales for the quarter edged up 1.4 per cent to £245m in the three months to July, down from the 8.3 per cent lift in the previous quarter.
Sales from its developing markets such as Taiwan, South Korea and Thailand accounted for 23.9 per cent of total sales in the second quarter as it continues to move towards its target of 30 per cent. In these regions, second-quarter sales grew 46.8 per cent sequentially.
The firm said it would make a further £15m of cuts the second half of the year.
“In taking these [cost saving] actions quickly and effectively we believe we will ensure maximisation of our sales, operating profit and cash positions to drive towards achieving our expectations this year,” said chief executive Harriet Green.