(Adds comments from finance director, analysts; background, share movement)
Nov 18 (Reuters) - Electrocomponents Plc forecast higher full-year cost savings, after reporting better-than-expected first-half profit boosted by cost cuts and the pound’s slide since Britain voted to leave the European Union.
The electronics component distributor, which supplies Raspberry Pi - a low-cost computer created to help millions of people get online and learn to code, also forecast higher second-half gross margins as it expected less purchasing costs thanks to the pound’s weakness.
Shares in the company surged as much as 12.1 percent to their highest since June 2002, making them the top gainers on London’s midcap index.
The company has been cutting costs in Asia Pacific, growing its high-margin private-label business and improving its online sales under CEO Lindsley Ruth, who joined in April 2015. He was tasked with turning around the company that had been struggling in Asia and failing to post sustained annual profit growth.
Electrocomponents said on Friday headline pretax profit rose to 55.1 million pounds ($68.4 million) in the six months ended Sept. 30, slightly ahead of its forecast of 54 million pounds and which at least five analysts said beat their expectations.
It also raised its cost-savings target to 18 million pounds ($22.3 million) for the year ending March 2017 from 15 million pounds and forecast 30 million pounds in annualised savings by March 2018, ahead of a previous forecast of 25 million pounds.
“Management is clearly executing well on its turnaround plans and we see more upside,” Stifel analysts wrote in a note.
The company, which gets about 72 percent of its revenue outside Northern Europe, said recent weakness in the sterling would boost second-half gross margins, as it would see lower purchasing costs in Southern Europe, Central Europe and Asia Pacific.
Full-year profit will see a 13 million-pounds currency benefit if exchange rates stayed near the first-half levels, the company’s Finance Director David Egan told Reuters. The weak pound boosted first-half profit by 7 million pounds.
Peel Hunt analysts upgraded their 2017 full-year adjusted pretax profit estimate to 120 million pounds from 109.5 million pounds and raised their share target price to 420 pence from 350 pence. ($1 = 0.8059 pounds) (Reporting by Pranav Kiran in Bengaluru; Editing by Amrutha Gayathri and gopakumar Warrier)