Why invest with usLeading global player in structurally attractive market
- Strong global business with highly attractive financial characteristics
- We have taken market share from smaller competitors, demonstrating the structural growth opportunity
- Now evolved to a common global strategy to increase the rate at which we gain market share and improve profitability
- New medium-term targets aimed at delivering improved financial performance
We are the world's leading high service distributor in large, growing and highly fragmented markets. We estimate that the global market in which we operate is worth around £30 billion, split evenly between electronics and maintenance products growing at around twice GDP and around GDP respectively.
There are five large international high service
distributors, including Electrocomponents, and together this group
has an estimated market share of around 15%.
Through the last seven years we have taken market share from
smaller competitors, demonstrating the structural growth
opportunity that exists for us.
We believe that our customer proposition and global scale and reach give us an advantage over the numerous small local and regional distributors against whom we primarily compete, allowing us to take market share from them.
There are clear benefits to being a large, global competitor in this marketplace. Customer needs are similar everywhere, leading suppliers in our industry are global and the internet enables global marketing. We have the global footprint, relationships with suppliers and eCommerce capabilities to take advantage of these trends.
We have evolved to a common global strategy to capture these
We believe that our global organisation and strategy will enable us to extend our advantages over our numerous smaller competitors and accelerate the rate at which we gain market share over the medium term.
Our common global strategy is
expected to deliver improved medium-term financial
We are targeting an average Group
sales growth rate of 5% to 8% per annum through the cycle. This
represents a significant improvement over our historical average
Group sales growth performance of 4% per annum.
Cost and gross margin actions,
including operating leverage, process cost leverage and our global
pricing strategy, are expected to result in a medium-term
Group operating margin range of between 9% and 11%. This is an
improvement on our historical performance of 7% to 10%, adjusted to
reflect a 75:25 International:UK sales mix.
Over the past seven years the Group's return on capital employed
(including goodwill) has ranged between 15% and 25%, significantly
above the Group's weighted average cost of capital. We are
targeting to raise this range to between 20% and 30% as the
benefits of faster sales growth and continued strong cash flow
generation are realised.
Our global strategy is being supported by additional investment. Combined with a slight improvement in stock turns and improved profitability we are targeting medium-term Group headline free cash flow to sales to range between 4% and 6%.
(1) Underlying sales growth, adjusting for trading days and currency movements. Target range includes estimated market growth of 3.5%, historic includes market growth of 2.5%
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International high service distributor