Distribution titan Arrow cracked the £650m sales barrier in the UK last year, but a squeeze on margins saw operating profit on the wane.
Accounts filed with Companies House this week reveal that the firm's solutions arm, Arrow ECS, grew its UK sales by 17.9 per cent to £482.1m in the year to 31 December. In cash terms revenue increased by a little more than £73m, a large part of which will surely have come from the acquisition of £50m-turnover UK VAD Sphinx in 2010.
Despite the big sales spike, operating profit declined by more than £1m to about £8.9m. This equates to a decline in margins from 2.4 to 1.8 per cent. Staff ranks grew from 286 to 375 during FY11, with sales headcount being boosted by 70 to a year-end total of 243.
In the distributor's volume components division, Arrow Electronics, UK sales grew 11 per cent to £168.6m last year. Half the growth was provided by Arrow's acquisition two years ago of semiconductor distie Nu Horizons. The firm added eight months' worth of turnover to its new owner's UK operation in 2011.
But the closure of Nu Horizons' warehouse and office in Coventry and resultant "reorganisation costs" contributed to Arrow incurring exceptional-item costs of £825,000.
Once again, despite the double-digit revenue increase, operating profit at Arrow Electronics UK took a hit in FY11, falling 0.6 per cent year on year to £3.9m. This represents a margin contraction from 2.6 to 2.3 per cent. The unit's staff numbers rose from 296 to 354 over the course of the year.
Between them, the two divisions took Arrow past the £650m sales mark in the UK last year. The wider Arrow group also continues to bulk up through consolidation, including the recent €48.1m (£40m) buyout of pan-European distie Altimate Group.
But in the US-headquartered giant's most recent quarterly update, chief executive Michael Long revealed that he intends to strip millions of dollars in costs out of the business after sales and profit went south in Q2. The distribution boss claimed he expects the market to be flat for the remainder of 2012.
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