Advanced Power Components (LON:APC) founded in 1982 is an AIM listed specialist distributor of electronic components and is a company I have followed for a number of years. As a business, APC is split into a number of autonomous units, who supply a wide range of specialist components and equipment to a wide range of customers within different sectors such as, aerospace, defence, display technology and specialist industrial and commercial markets. However, although contributing, the components side of the business is not the part of the businesses that interests me the most as an investor, it is more the diversification strategy followed by APC which has resulted in a controlling interest in three subsidiaries within the energy saving products and technologies market.
Following the third substantial reported order for LED lighting products from a supermarket chain through the Minimise brand, Mark Robinson the APC Chief Executive Officer has taken time out to discuss various aspects of the business, including, the LED orders, QV Controls, Minimise energy services and funding for growth:
Q1. How are the general trading conditions for the core components business? Do you have any thoughts on potential market or brand consolidation going forward?
The general trading conditions in the electronic component distribution sector have been tough to say the least for the past two years. AFDEC (Association of Franchised Electronic Component Distributors) statistics indicate that monthly sales have declined by 26% during the previous 24 months. Our distribution business has declined by less than 10% over the same period indicating that we’ve increased market share which is some consolation. We would expect this to mean that we have the potential to maintain this increased market share when the market begins to grow again, which I believe will coincide with an improvement in general economic conditions.
As far as brand consolidation is concerned, we have done some of this internally over the past couple of years as part of reducing management overhead but we still have specialist technical sales people focussing their efforts on promoting the brand and the products in which they have a high level of expertise. This is critically important to us as consolidating the brands and have everyone selling everything would ultimately dilute the expertise we bring to niche markets which is ultimately why we exist .
Q2. Can you please explain…
