Increase in Billings, ‘but a single Swallow doesn’t make a summer’

27 April 2010

According to afdec/ECSN chairman Adam Fletcher, the March 2010 figures are indicative of improving demand and activity from UK customers

The latest performance figures from the UK and Ireland Manufacturer Authorised Distributors of electronic components sector released by afdec (part of the Electronic Components Supply Network) show a 27.2% increase in billings (net sales invoiced less credits) in March 2010 when compared to the previous month.

Furthermore, there’s a 25.8% increase when compared to the same month last year. According to afdec/ECSN chairman Adam Fletcher, the March 2010 figures are indicative of improving demand and activity from UK customers. “This is an outstanding result and certainly beyond my expectations, but a single Swallow doesn’t make a summer,” said Fletcher. “There is still no single identifiable demand driver in the UK (or elsewhere), so I suspect we may be witnessing a peak in the UK demand cycle that’s likely to flatten out somewhat over the next quarter. Component manufacturing lead times are settling down on longer lead-times than the average over the last few years. Sporadic product shortages are occurring in some areas but manufacturers are responding quickly to resolve them.”

Billings changes by product group in March ’10 compared to the same period last year were:
• Semiconductor increased by 38.2%
• Passives increased by 33.1%
• Electromechs increased by 16.9%
• Component Assemblies increased by 14.4%
• Other Products declined by 27.9%

The Book-to-Bill ratio in March 2010 declined to 1.06:1 in all product groups with the exception of Other Products, as authorised distributors converted Q1’s strong Bookings into Billings. The overall Stock Turn improved to 2.9 times, with total inventory increasing by 4% to £168M, yielding an improved ‘turn / earn’ ratio of 93:100. The Debtor Days declined by three days when compared to last month, and remain within the normal range.

“The positive Book to Bill ratio in March is great news, especially in such a high Billings month. It seems that customers are placing significant additional order cover and that they are consuming the materials they buy,” continued Fletcher. “The Sales by Month ‘three month moving average’ continues to trend up in every components sector, suggesting that further billings growth is likely in Q2 ’10. We must continue to exercise care and maintain close control of costs particularly inventory through this period of unexpected growth.”


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