Premier Farnell says trading on track

Electronics distributor Premier Farnell said on Thursday its recent move to China had encouraged it to look more closely at India, as it reported a 16 percent rise in first-quarter profit.

The group, which sells a wide range of items from batteries and microchips to diodes, posted pretax profit of 17.5 million pounds, up from a restated 16.4 million a year ago. Sales fell to 183.6 million pounds from 188.6 million, though the company said they rose 4 percent at constant exchange rates.

"The first quarter has seen progress against last year in revenue, operating profit and cash generation, and we are driving the business through continued investment," said chief executive Harriet Green.

"We expect the second quarter will continue to reflect the results of the investments we are making and will deliver further revenue growth over last year, with our focus on the electronic design engineering, the web and internationalising our high-service model," she said.

Analysts were impressed by the improved profits but questioned future growth.

"It's encouraging progress in terms of margin in both the U.S. and at the industrial products division," said one analyst who did not wish to be named.

"The e-commerce strategy continues to impress, but the outlook isn't going to set the world alight," said analysts at Deutsche Bank.

Green told reporters that sales were up 5.5 percent in the firm's European and Asian divisions, adding that the business was also looking to tap further into Asia following its recent Premier Electronics foray into China.

"I will be in India in August to look at what are the best options in moving forward -- whether it's a similar greenfield approach (as in China), whether it's a joint venture, or whether it's a purchase of a company there."

The firm's shares, which have risen around 8 percent in the last six months, opened 3.57 percent higher at 217-1/4 pence by 9:55 a.m., valuing the business at around 1.09 billion pounds. [via]