Electronics distributor Acal is setting it sights on acquisitions in mainland Europe as well as pushing for organic growth after posting its year-end results.

Acal suffered a three per cent decline in turnover for the year ended 31 March 2008 to £159.5m compared to £164.5m in 2007. However pre-tax profit increased to £6.1m for the year, compared to £5.1m the previous year.

The firm, which offloaded its IT distribution business to Avnet Technology Solutions last year (CRN Online, 18 December 2007), focuses on two main business strands – industrial electronics (such as defence, aerospace and defence sectors) and high end/OEM parts services . The sale to Avnet has given it a multi-million pound war chest with which to pursue its acquisition strategy.

Speaking to CRN, Tony Laughton, chief executive of Acal, said: “The electronics division and parts services are the two legs of Acal and the areas that we want to develop and grow.

“Any acquisitions are likely to be in the electronics area than the parts services business. We are looking to grow this two-fold – one is the expansion of our semiconductor product portfolio and the other our Radio Frequency (RIF) and wireless portfolio.

“In our parts services business, we have seen a lot of new contracts in the point of sale (PoS) space – primarily for the retail and hospitality market, and this opens up a new technology and product arena for us.”

Loughton added that the distributor’s outsourcing business was also growing, with a significant contract signed in last month.

“A lot of our customers and potential customers are looking to manage their own inventory and stock write-offs in a far more efficient way,” he said.

He added that the firm will concentrate on building its existing vendor partnerships further and getting a ‘broader geographical franchise’, with potential ‘specific niche extensions’ to its vendor base.

“With the technology that we have today, we cover a vast majority of the marketplace and our products are very niche. The vendor base that we have has a whole variety of suppliers in it and most of them are pretty forward looking when it comes to the key technology.”

Jim Virdee, finance director at Acal added the firm will be concentrating on building its presence in existing territories through organic growth, but also to develop critical mass in continental Europe through acquisition.

“We have quite a strong presence in smaller countries such as Benelux and the Netherlands, but we are relatively weak in bigger markets such as Germany, which is a likely acquisition target as it is quite a stable market at the moment,” he said. “We already have critical mass in the UK and are unlikely to find any substantial [acquisition target] that doesn’t present us with some degree of conflict.”