Premier Farnell sees the light

PREMIER Farnell's key US and European markets have stabilised in the past quarter, ending an unprecedented downturn that slashed the electronic products distributor's pre-tax profits by more than 40% to £60m in the year to 3 February.

But chairman Sir Malcolm Bates warned that no sharp recovery was in the wings, saying the company was 'counting on little change' in the short term.

Operating profits in the fourth quarter fell to £21m from £23m in the previous three months as margins shrank from 12.1% to 10.5%. However, the dividend is pegged at 9p for the year, reflecting hopes for a recovery this year. A cost-cutting programme left costs £34m lower in the fourth quarter compared with the first.

Premier was hit hard by deteriorating demand for its products in the US and Europe in the first half. The slowdown came just as Premier was beginning to see the benefits of a restructuring programme involving procurement agreements with about 60 companies in North America alone. These included a deal late last year with BAE Systems that allows engineers at the defence and aerospace group to buy components through the Exostar online trading exchange formed by a Boeing, Lockheed Martin, Raytheon and Rolls-Royce.