Electrical Distributor Profit Margins Highest Since 1997, with Sales also on the Rise
The electrical distribution industry’s financial performance levels continue to improve, according to a recently released report from the National Assn. of Electrical Distributors ( NAED ). The 2005 PAR Highlights , in its third consecutive year, tracks financial growth among NAED members.
The Performance Analysis Report (PAR) is a benchmark for electrical distributor operations. Results profiled in the 2005 PAR Highlights are based on 2004 financial survey data of 166 participating NAED distributor members throughout the U.S. Findings are broken down in two categories: “typical” and “high profit.” Nearly all figures provided in the report are medians.
Signaling a continued upward trend for “typical” distributors was an increased net profit margin that grew from 1.3% in 2003 to 2.1% in 2004. While margins have increased during the last three years, this level was last achieved in 1997. Profit margins for “high profit” distributors increased from 3.5% in 2003 to 4.6% in 2004.
The PAR Highlights also includes a five-year trend analysis of key ratios to help distributors improve and grow their business. Additional data revealed increases in sales volume, return on net worth and inventory turnover. For example, sales growth for the “typical distributor” showed an increase of 16.5% compared to 2.3% in 2003 data.