Electrical distributors' gross profit and net profit (before taxes) for 2001 both came in below 2000 levels, according to the financial norms of the electrical wholesaling industry released this fall by the Electrical Manufacturers' Credit Bureau (EMCB), Temecula, Calif.
In 2001, distributors saw gross profit before taxes come in at 18.12 percent, slightly behind 2000's 18.66 percent. In the notes accompanying the data, EMCB said approximately 20 large wholesalers with net worths in excess of $10 million “tend to dominate the annual statistics.” These wholesalers include the national chains, which were first included in the norms calculation in 1999.
Noted EMCB, “The gross profit percentages of WESCO and Graybar are around 18 percent. Home Depot and Lowe's both expanded supply operations in 2001 and are targeting construction professionals including electrical contractors. Their financial information was not included in the statistics, but by way of comparison, their net profit before taxes were 9.29 percent and 7.35 percent respectively and their gross profit percentages are around 29 percent.”
The 18.12 percent gross profit is the second lowest gross profit over the last 10 years, as seen in the accompanying chart.
Net profit before taxes was also lower at 1.43 percent in 2001, said EMCB, after coming in at 2.44 percent in 2000. The 1.43 percent rate is still respectable in the context of rates achieved in the past 10 years. The statistics are also broken down according to net worth groupings.
As in past years, some mid-sized distributors managed to pump up gross profits higher than their very small and very large counterparts and brought more to the bottom line, too.
In 2001, distributors saw assets shift from cash and receivables into inventories.
According to EMCB, “Cash was up while gross-profit percentage and net profit before taxes both showed significant declines. Sales in most companies and in most parts of the country showed declines from 2000 to 2001.
“The ratios indicate that companies in 2001 increased cash, lowered inventories and took decreases in gross profit to weather a year of significantly lower net profits and in many cases net losses.”
Electrical Wholesalers' Operations Statistics
|Current Assets:||Capital Ratios:||Operating Analysis:|
|Cash||7.08%||Current Ratio||1.81 to 1||Gross Profit||18.12%|
|Receivables||41.55%||Quick Ratio||.88 to 1||Net Profit||1.43%|
|Inventory||48.01%||Worth Debt Ratio||.58 to 1||(Before Taxes)|
|Net Worth |
|Worth Debt Ratio||.58||.43||.08||.39||.75||0.99||.94||.55|
|Gross Profit (%)||18.12||18.66||22.53||23.34||24.50||21.42||22.33||17.84|
|Net Profit (%)**||1.43||2.44||1.61||1.36||3.13||1.83||1.80||1.41|
|Current Ratio = Current Assets/Current Liabilities |
Quick Ratio = Cash and Receivables/Current Liabilities
Worth Debt Ratio = Net Worth/Total Liabilities
*% In Relation to Current Assets
|Worth Debt Ratio||.43||.50||.48||.69||.71||.73||.77||.60||.96||.80|
|Gross Profit (%)||18.66||20.10||20.19||21.47||20.00||20.80||20.26||20.47||18.38||20.60|
|Net Profit (%)||2.44||2.21||2.46||2.90||2.34||2.23||2.40||1.94||1.74||1.58|
|(Before Taxes) |
*% In Relation to Current Assets
|Source: Electrical Manufacturers' Credit Bureau|
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