Net profits for electrical distributors in 2007 slipped slightly to a median of 3.2 percent, according to the recently released National Association of Electrical Distributors (NAED) 2007 Performance Analysis Report (PAR) highlights.
The 3.2 percent figure was lower than last year's net profit margin of 3.7 percent, but higher than medians of 2.9 percent in 2005, 2.1 percent in 2004 and 1.3 percent in 2003. Among a select group of “high profit” distributors, the 2007 profit margin was almost twice as high at 6.3 percent.
Accompanying the increased profits were 2007 median sales increases of 4.6 percent. That dropped significantly from 2006's median sales increase of 17.4 percent and also was lower than the 11.1 percent increase recorded in 2005.
The report's author, Dr. Al Bates of Profit Planning Group in Boulder, Colo., urged other electrical distributors to “examine what these high-profit firms are doing and mirror their actions.”
PAR highlights include a five-year trend analysis of key financial ratios. Results from the 2008 survey are based on data from 167 NAED member electrical distributors. The typical distributor surveyed, based on median figures, had annual sales of $48.4 million and achieved a gross margin of 22 percent in 2007. Inventory turnover (cost of goods sold divided by average monthly inventory) was 4.3; payroll expenses were 13.3 percent of sales.
For more information on the PAR report, contact NAED at (888) 791-2512 or e-mail at [email protected].