Anixter has reported that Q1 sales of its Enterprise Cabling and Security Solutions division rose in EMEA by 12%, giving it a record total sales for the quarter of $1.39bn, up 9%, reflecting 2% organic growth. Record ECS security sales of $376m were up 73%, reflecting 7% organic growth.
EBITDA of $65.5m, or 4.7% of sales, compares to $66.7m, or 5.2% of sales, in the prior year quarter. The decline in margin was caused by the mix impact from strong growth in the security business, unfavourable impacts of foreign exchange and lower average copper prices, and competitive pricing pressure in the market.
"While we delivered strong growth in sales and profits in our security business, overall the quarter was challenging. Enterprise Cabling & Security Solutions ("ECS"), our largest segment, delivered its third consecutive quarter of strong revenue performance; however, operating performance was negatively impacted by competitive margin pressure. While margin was solid in our Electrical and Electronic Wire & Cable segment, our sales growth was negatively affected by copper and slower industrial growth, especially related to the oil and gas sector in Canada. From a geographic perspective, we delivered our strongest organic growth in the US; however, North America was significantly impacted by the weaker Canadian macro environment," commented Bob Eck, President and CEO. "Importantly, we made significant strategic progress in the quarter as we began to sharpen our focus on our cabling and security businesses and improve the return on capital. As part of this effort, the announced sale of our Fasteners segment enables us to better direct resources toward areas that will maximize shareholder value in both the near term and the long term."
Enterprise Cabling and Security Solutions sales of $915.8m compares to $776.8m in the prior year period, a 17.9% increase, driven by an increase in security sales. Geographically, organic sales increased by 3.0% in North America and 12.5% in EMEA, partially offset by a 5.5% decrease in Emerging Markets.
“Overall, our first quarter 2015 organic sales growth of 2.2% was at the low end of the outlook we provided at the beginning of the year. Looking ahead, we expect the positive trends in our security business to continue, and are cautiously optimistic that improved market conditions in our network infrastructure business that began in late 2014 will persist. While our Wire & Cable business delivered sales that were below our expectations, we are pleased with the margin stabilization in the business." commented Bob Eck. "We believe that the balance of the year will bring with it more uncertainty in both the macro economic environment and within our industry so we have expanded the range for our sales growth outlook and now believe that full year organic sales growth from continuing operations will be in the 0 - 4% range."