Electrical distributors' net profits fell by 48 percent in 2009 compared to the previous year, while gross profit inched down slightly, according to the Electrical Manufacturers' Credit Bureau (EMCB), Murrieta, Calif. EMCB releases its National Norms for distributors' financial performance with a one-year delay, so we're just now getting a picture of how things looked back when the economic recession was in its darkest days.

Distributors' net profit before taxes fell to 2.16% of sales from 4.20% in 2008, while gross profit dipped to 20.08% from 20.24%. As shown in the table above, the net profit figures haven't looked this ugly since the recession of 2001.

Electrical distributors were holding more cash as a percentage of total current assets and less inventory and receivables in 2009 compared with the previous year. EMCB's National Norms for 2009 show that electrical distributors' current assets were composed of 10.16% cash, 45.29% receivables and 41.3% inventory. The current ratio (current assets/current liabilities) for distributors rose to 2.17:1, the quick ratio (cash and receivables/liabilities) rose to 1.20:1 and the worth-debt ratio rose to 0.72:1. The ratios rose due to the increase in cash holdings, EMCB said.

When comparing sales, gross profit and net profit before taxes for companies that reported their financial results to EMCB for both 2008 and 2009, the bureau found that sales were down 18.14% after rising 4.57% in 2008, gross profit declined 19.78% and net profit dropped 60.40%.

EMCB broke out financial results for 25 electrical distributors with net worth of more than $10 million, including Graybar and WESCO. WESCO's gross profits fell to 19.46%, Graybar's gross rose slightly to 19.53% and Rexel's rose to 24.49%. By way of comparison, Home Depot posted 33.87% gross profit that year and Lowe's had 34.86%.

EMCB NATIONAL NORMS - LAST 10 YEARS
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Cash* 2.65 3.32 7.08 5.59 4.95 7.14 5.67 4.85 5.36 7.21 10.16
Receivables* 42.88 41.84 41.55 42.21 44.14 46.04 46.28 49.43 50.89 46.98 45.29
Inventory* 51.30 50.20 48.01 48.75 47.20 43.35 44.52 42.67 41.68 43.00 41.30
Current Ratio 1.92 1.62 1.81 1.92 1.91 1.97 1.91 1.85 1.81 1.93 2.17
Quick Ratio 0.87 0.73 0.88 0.92 0.94 1.05 0.99 1.00 1.02 1.05 1.20
Worth Debt Ratio 0.50 0.43 0.58 0.69 0.67 0.71 0.66 0.64 0.50 0.55 0.72
Gross Profit 20.10 18.66 18.12 19.44 20.42 20.93 20.90 21.03 20.11 20.24 20.08
Net Profit (Before Taxes) 2.21 2.44 1.43 2.27 2.41 3.56 4.04 5.35 4.74 4.20 2.16
*% in relation to current assets

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