European electronics distribution sees rapid growth in Q1 '10

07 June 2010

The latest electronic components DTAM figures released by IDEA indicate that European Distributors are continuing to see dramatic sequential growth in bookings and billings
The latest electronic components DTAM figures released by IDEA indicate that European Distributors are continuing to see dramatic sequential growth in bookings and billings

The latest electronic components DTAM (Distributor Total Available Market) figures released by IDEA (International Distribution of Electronics Association) indicate that European Distributors are continuing to see dramatic sequential growth in bookings and billings.

According to IDEA Vice President Adam Fletcher, the electronic components markets in Europe have historically grown in the first and second quarters each year, but the dramatic rate of growth indicated by the consolidated Q1 ’10 figures was far higher than previously forecast. In fact, it is in line with historical European first quarter trends.

However, Fletcher councils caution: “Despite the first quarter results being in line with the financial results reported by many sectors of the global electronic components market, it is very unlikely that this high bookings growth rate will continue in Europe. We feel that it will level off over the next few quarters as manufacturing lead-times in the semiconductor and passive markets normalise closer to six to eight weeks.”

The supply network visibility in the European electronic components market remains limited, with no single identifiable demand driver, despite anecdotal evidence of improving customer confidence. Fletcher suggests that much of the increase in bookings activity has been driven by the extension of manufacturing lead-times and their impact on customers ERP (IT) systems. “Over the last decade, customers have become ‘conditioned’ to expect almost ‘ex-stock availability’ for electronic components and have set the data in their ERP systems accordingly. The manufacturing lead-time has a very significant impact on the algorithms used in customers ERP systems and as lead-times have extended, the result is a request for greater order cover (bookings). We need to proceed carefully because as manufacturing lead-times decline to more normal levels, order cover is also likely to be scaled back,” concluded Fletcher.

Total European Distribution Bookings (Net Sales Orders Entered) in Q1 ‘10 increased by 21% when compared to the previous quarter and by 55% when compared to the same period in the previous year. Sector specific Bookings changes in Q1 ’10 compared to the same period last year are: Semiconductors increased by 69%; Passives increased by 40%; and Electro-mechanisms and Other Components increased by 23%.

Total European Distribution Billings (Net Sales Invoiced less Credits) in Q1 ‘10 improved by 30%, when compared to the previous quarter and by 23% compared to the same period in the previous year. Sector specific Billings changes in Q1’10 compared to the same period last year are: Semiconductors increased by 28%; Passives increased by 18%; Electro-mechanisms and Other Components increased by 10%. The Book-to-Bill ratio jumped in Q1 ’10 from 1.04:1 in the previous quarter to 1.18:1

IDEA is a consortium of independent Trade Associations operating in the global electronic component distribution market. The data included in the European DTAM report was complied from statistics provided by afdec / ecsn (UK/Nordic), Assodel (Italy), FBDi (Germany) and SPDEI (France). Statistics are gathered quarterly from over 100 authorised distributors of electronic components operating in Denmark, France, Finland, Italy, Germany, Norway and the UK. Members of the various trade bodies in IDEA represent 73% of the DTAM in the countries in which they operate and the Association is therefore confident that the consolidated figures included in its report provide a reliable perspective of trends in the European Electronic Component market.


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