The three-year "investment for growth" strategy is the result of a six- month review by John Hirst, appointed chief executive last summer. It will see the group invest pounds 45m over three years in reshaping systems, creating common customer and product databases and developing more efficient purchasing and logistics systems in the US.
A further pounds 15m a year will be invested on upgraded sales training, increasing the number of catalogues and range of products. The group will increase its electronic commerce capability so that its largest customers, such as Philips, are linked directly to Premier Farnell through intranet systems. Geographic expansion is also on the cards, with Germany and other European markets first on the list.
The overhaul will result in a pounds 10m exceptional charge to the accounts for the year to 31 January. Most expenditure will be covered by the sale of surplus assets, such as spare freehold sites in the US. Mr Hirst said: "The conclusion of the last six months' work is that to realise Premier Farnell's full potential, we must run it as a coherent group rather than as an unfocused conglomerate."
Mr Hirst denied that the Premier deal had been a mistake, saying the group would not have won several of its global clients without the increased international scope of its operations.
However, the changes are a damning indictment of the way the business was being run before. Each division had its own systems, cataloguing procedures and product ranges. In some regions, different sales forces targeted the same customers with different products.
The result has been inefficiency and a loss of business, hampered last year by price increases which forced customers to go elsewhere. In the US, for example, Premier Farnell has lost more than 1 percentage point of market share, although US sales have now been "stabilised".
Many back-office functions will now be streamlined, leaving scope for expansion in the key areas of products and catalogues. "Value has been destroyed," Mr Hirst admitted. "We have to get back on track."
The changes were welcomed by analysts, who marked the shares 29p up to 191.5p. However, they have still lost three-quarters of their value since 1996. Earnings per share are lower now than in 1995, although sales have risen 50 per cent. Mr Hirst has already cut the dividend after last October's profits warning, but rebuilding investor confidence will take some time.
Analysts backed the review. Ed Wright at Dresdner Kleinwort Benson said the City was "relieved" the company was going back to basics. Another said Premier was "a growth story with a catalyst to it".
On profit forecasts of pounds 108m for the year almost ended, the shares trade on a forward multiple of 11. This stock has proved a huge disappointment in the recent past, and a full recovery is likely to take some while. But in two years' time this period could look like the turning point.Reuse content