European electronic components market trends – Q2 2019

9th September 2019
Alex Lynn

The European Distributor electronic components Total Available Market (DTAM) has unexpectedly declined in the second quarter of 2019, according to the report here from Adam Fletcher, Chairman of the International Distributors of Electronics Association (IDEA). 

Consolidated returns from the association’s member companies confirm average ‘Billings’ (sales revenue invoiced, less credits) declined by (6.3%) in Q2 2019 when compared to the same calendar quarter 2018, ending a period of growth that had spanned twenty-two consecutive calendar quarters. 

Growth in the European electronic components market slowed to just 2.4% for the full half year, exacerbated by a global economic slowdown, ongoing trade wars and Brexit. IDEA members forecast stronger growth in the second half of 2019 but this is now looking unlikely despite few manufacturing capacity constraints threatening to extend lead-times, but this situation will change in mid-2020 as stronger growth returns.

Each month IDEA collates the statistical data reported by its member associations throughout Europe and consolidates the figures before publishing them as headline information. IDEA uses three primary metrics in its reporting process: ‘Billings’ (sales revenue invoiced, less credits), ‘Bookings’ (net new orders entered), and the ratio of the two known as the ‘Book to Bill’ (or B2B) ratio. 

All three metrics are important, but the consolidated ‘Billings’ number is possibly the most critical value: “The ‘Billings’ number is the most accurate indicator of the performance of all organisations operating in the market”, says Fletcher. “Organisations are able to use this figure to compare their actual operating performance with the market’s average sales revenue performance”. 

The data presented in the following graphics is shown in K€ Euros and where necessary has been converted from local currency at a fixed exchange rate for the year.

Q2’19 Bookings, Billings & B2B - Graphic T1

Graphic T1 is a visual representation of twelve quarters of ‘Billings’ and ‘Bookings’ together with the corresponding ‘Book-to-Bill’ (B2B) ratios. A positive B2B number, i.e. greater than one, indicates growth in electronic components markets but a number below one is evidence of a decline. 

A quick glance at the chart suggests that there has been a decline in growth in the second quarter of 2019, an unusual outcome that does not follow either the historical precedence or IDEA member guidance. Further analysis reveals a declining Book to Bill ratio which when it’s as low as 0.88:1 confirms certainty of lower growth during the last two quarters of the year.

Q2 ’19 Bookings Trend - Graphic T2

Graphic T2 compares the total electronic components ‘Bookings’ result achieved by each European country in Q2'19 and contrasts and compares their returns with the previous quarter's results and those achieved in the same period last year.

The blue bar reveals that on average European ‘Bookings’ declined by (11.2%) in Q2’19 when compared to the previous quarter, Only Austria and France were able to report Bookings growth in Q2. 

The light brown bar compares ‘Bookings’ growth by country in Q2'19 with those in the same quarter 2018 and indicates that on average ‘Bookings’ declined by (19.6%), No European country was able to report growth over the previous year.

The dark brown bar compares average ‘Bookings’ achieved in Europe year-to-date (YTD) with the same period in 2018, revealing that the average Bookings growth rate declined by (10.6%) across Europe over the 12-month period, with no country in Europe showing any growth. Once again, no country in Europe was able to report growth YTD, strongly suggesting that the European market is slowing quickly.

Q2 ’19 Billings Trend - Graphic T3

Graphic T3 illustrates total electronic components ‘Billings’ achieved in European markets in Q2'19 and contrasts and compares the results with the previous quarter's results and those achieved in the same period last year. 

The blue bars compare Q2’19 ‘Billings’ with the preceding quarter’s figures, revealing that European electronic components markets experienced an average decline of (6.3%) in Billings over the three month period.

The light brown bars compare Q2’19 with the same quarter last year revealing that European electronic components markets grew by an average of just 0.3%. The French, German and Swiss markets did best, but growth rates in the tenths of one percent are at best marginal.

The dark brown bars compare current YTD ‘Billings’ with the same period 2018, revealing that nearly all countries are experienced Billings growth, the average of which is 2.4%. Italy and the UK are sadly bucking the generally positive Billings trend in Europe.

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