Premier Farnell will struggle to impress


Our view: Avoid

Share price: 250.4p (-24.2p)

On the face of it, Premier Farnell, the distributor of electrical products, is doing OK. Yesterday, the company reported adjusted pre-tax profits of £28.5m, up 13 per cent, on adjusted revenues of £252.5m, up 8 per cent. The "adjusted" is there because the company has stripped out the contribution of of TPC Wire & Cable, which was sold at the start of the quarter, from the comparisons.

The performance of the UK, which showed revenues up 16 per cent, and the US, where revenues were up just over 5 per cent but profits surged by 52 per cent thanks to a sharp improvement in margins, caught the eye.

But amid these rosy-looking figures are some sharp thorns. Overall, adjusted profits and revenues fell some way short of the City's consensus forecasts. Hence the shares' steep dive yesterday.

Europe looks all right but analysts had expected better, and then there's Asia-Pacific, where revenues actually fell 3.7 per cent. China and India are motoring along like one would expect but there are problems in Singapore and Malaysia, which have dragged the figures down.

At the end of last year, we advised investors to take profits at 280p – Premier Farnell naturally benefited hugely from the first stages of the economic recovery as companies rushed to restock inventories.

But we highlighted concerns that the going was going to get tougher and growth would inevitably slow at Premier, leading to a flat, or declining, share price. So it has proved, and the company is going to find it harder to produce exciting numbers over the coming months because they will be compared against some very good quarters.

The relatively poor performance, particularly in the all-important Asian region, this time round only heightens our concerns. The shares trade at about 13.5 times forecast full-year earnings, falling to about 12.5 times 2012 levels. That's in line with historic multiples, though cheaper than rival Electrocomponents, with a serviceable yield of 4 per cent. Given our concerns and yesterday's statement, however, they look fairly valued. We'd keep avoiding.

Victoria

Our view: Buy

Share price: 287.5p (no change)

Even a true William and Kate – sorry, Duke and Duchess of Cambridge – obsessive is unlikely to be aware of the role that was played by Victoria in April's royal wedding, with the Kidderminster-based group supplying the red carpet which ran through Westminster Abbey on our future king's big day.

On Wednesday, the floor coverings manufacturer revealed its preliminary results, and – aside from gaining the regal seal of approval – it conceded that in the UK it was seeing the "toughest environment... for years".

Despite this, its revenues in this country rose by 9 per cent, helped by a sales jump of over 25 per cent in the past three months alone. Its larger Australian market, meanwhile, posted an increase in revenues of just 2.1 per cent. Although that was behind the performance at home, Victoria did manage to improve its margins down under. We would also note the impact of natural disasters in Australia and New Zealand.

The overall result was a 77 per cent rise in pre-tax profits, justifying Victoria's statement in May that its figures would come in ahead of expectations. Given the economic pressures on the British consumer, plus cost pressures, there are reasons to be cautious, but there is enough here to suggest that Victoria can hold its own, despite the rocky macro backdrop.

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
Jonathan de Guzman of the Netherlands and Willian of Brazil compete for the ball
world cup 2014LIVE BLOG: Hosts Brazil take on the Netherlands in third-place play-off
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice