European Electronic Components Markets Continue to Slow…
The latest consolidated Distributor Total Available Market (DTAM) figures released by IDEA (International Distribution of Electronics Association) indicate that European electronic component distributors saw their Billings (sales revenue less credits) figures continued to decline during the last quarter of 2011 compared to both the previous quarter and to the same period the previous year. European distribution Bookings (net sales orders entered) figures also declined in the period, both results much in line with the association’s forecast.
Announcing the Q4’11 figures Adam Fletcher, IDEA Chairman, remarked that the European electronic components markets experienced the year’s greatest growth in Billings growth in Q1, probably as a result of the earthquake and tsunami in Japan, which prompted customers to increase their inventory levels: “But the electronic component market proved more robust than customers feared and supply overtook demand in Q2”, Fletcher said. “Many customers have continued to steadily reduce their inventory in what they perceive as a deteriorating macroeconomic environment, which has led to a corresponding reduction in manufacturing capacity, a declining trend that we’re likely to see has continued into Q1 2012”.
Total European Distribution Billings (net sales invoiced less credits) in Q4 ‘11 declined by (14%), when compared to the previous quarter and by (12%) compared to the same period in the previous year. Sector specific Billings changes in Q4 ’11 compared to the same period 2010 were: Semiconductors declined by (15%); Passives declined by (12%); Electro-mechs and Other Components declined by (2%).
Total European Distribution Bookings (net sales orders entered) in Q4 ‘11 declined by (8.2%) when compared to the previous quarter and by (23%) when compared to the same period in the previous year. Sector specific Bookings changes in Q4 ’11 compared to the same period 2010 were: Semiconductors declined by (29%); Passives declined by (24%); and Electro-mechs and Other Components declined by (7%).
Book to Bill
The overall European Book to Bill ratio improved in Q4 ’11 to 0.93:1, a further improvement of 5 points compared to the previous quarter but as both Bookings and Billings are approximately 25% off their Q1 peak, the improvement might not be sustainable. However demand for electronic components in Asia remains positive and global demand is likely to improve in the second half of 2012, even in the current weak macroeconomic growth environment.
“Many customers continue to operate on minimal inventory”, continued Fletcher “but they must start to consider supply network risks more carefully and start to view inventory as an asset rather than a liability. Effective inventory management is key if the supply network is going to be able to support customers’ electronic components requirements when demand again overtakes supply, which it will!”