Company report: Premier Farnell

Premier Farnell, the FTSE 250 company that supplies electronics components to the telecommunications and consumer electronics industries, can trace its origins back to AC Farnell, which opened in Leeds in 1939 to sell radio parts.

Farnell listed in London in 1966 and, 30 years later, the group was created in its present form when it acquired Premier Industrial Corporation, the American group, for £1.85 billion.

Although it has more than 4,000 employees worldwide and offices in 24 countries, the headquarters remains in Leeds and most of the company’s 800 employees there come from the city.

Andy King, president of Farnell Europe, says that the company has a very talented workforce in Leeds and that the city proves appealing to potential employees.

“It’s a good place to run this sort of business from,” he says. While he describes the business as “not recession-proof, but not recession-prone either”, Premier Farnell, like its competitors, has been affected by the downturn. The 36 per cent fall in pre-tax profits and 15 per cent decline in underlying sales reported earlier this month was the worst quarterly performance in seven years.

Mr King says that the company has been looking to compensate for falling sales in more mature markets by targeting growth in areas in under-exploited regions such as Eastern Europe, where sales are up 56 per cent, and India, where the figure is up 167 per cent.

About 50 per cent of Premier Farnell’s business is conducted online, which reflects the way that its customers — mostly engineers — want to do business.

As well as selling its 400,000 products from 2,500 suppliers to more than two million customers online, the company is using the internet to provide a range of services such as data, information and tools that engineers need to do their jobs.

Premier Farnell introduced element14 this month, which Harriet Green, the chief executive, described as a “Facebook for engineers”. It allows users to collaborate on projects, exchange ideas and easily buy the components they need for their designs.

Mr King says that companies are still spending on research and development even during the downturn and that some of the best ideas were generated in past recessions.

Although he will not be drawn on calling the end of the downturn, Mr King says that Premier Farnell saw some improvement in sales in April and May: “We’re waiting to see if that continues.”

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