Electrocomponents PLC (LON:ECM) said it has reinstated dividend payments following what it said was “increased confidence” in its business model and financial strength amid market share gains in the first half of its current year.
In its results for the six months to September 30, 2020, the FTSE 250 industrial and electronics products maker said it has delivered a “resilient performance”, although adjusted pre-tax profits declined 28.1% to £74.3mln while revenues fell 7.1% to £908.9mln.
The company said strong operational improvements during the period had been “more than offset” by costs associated with the coronavirus pandemic, which had dented its margins and also incurred an additional £8.8mln in outbound freight and labour operating costs.
Despite this, Electrocomponents said it had made “significant market share gains” during the six months and that momentum had continued to build in all regions.
As a result of the performance and “strong free cash flow generation”, the company said its previously deferred 2020 final dividend of 9.5p per share will be paid as an additional interim dividend alongside an interim payment of 6.1p in line with its normal policy.
Into the second half, the group said trading in the first five weeks of the period has “continued to see momentum across all regions” with market share gains in the industrial sector.
However, the firm added that it was aware of “challenges” caused by the coronavirus pandemic and that new lockdowns in some of its key markets meant related costs were “unlikely to ease slightly” as previously hoped.
“Thus, although we are confident about the strength of our business, we remain cautious about the economic backdrop and short-term uncertainties”, the company said.
“We are in difficult and uncertain times and we remain cautious about the economic outlook. However, what has become clear, especially over recent months, is that our value-added solutions offer provides competitive advantage, gross margin support and customer engagement that ensures customers are won and retained”, Electrocomponents chief executive Lindsley Ruth said in a statement.
“Meanwhile our industry-leading omni-channel proposition positions us well versus peers. The operational building blocks and financial strength are in place for Electrocomponents to accelerate future growth and deliver ongoing outperformance”, the CEO added.
The company’s shares rose 0.9% to 772p in early trading on Tuesday.