Kewill Systems Plc has slipped into loss after continuing problems with its disastrous German acquisition, Weigang MCS GmbH (CI No 1,671), and falling distribution levels of Hewlett-Packard Co hardware in Germany and Austria. For the six months to September 30, the computer software and management consultancy group saw pre-tax losses of ?172,000 against profits of ?1.7m last time, while turnover dropped 28% to ?15.4m. Stuttgart-based production and manufacturing control systems software house Weigang, described as a ‘sick chicken on penicillin’, is still being submitted to rigorous cost-cutting. This will continue to base sales level, and by April 1993, headcount should be reduced to 29. Revenues plummeted to ?800,000 from ?2.6m, while the company sank into operating losses of ?1.3m compared with profits of ?200,000 last time. Weigang is currently focussing on both improving its marketing strategy to try and regain a dwindling customer base, and on reclaiming debts from customers that in some cases haven’t paid for years. Hopes are that Weigang will return to profitability by the end of this financial year, but if not other options such as merger or sale will be examined. HAN Dataport, Kewill’s computer-aided design and manufacturing house, with operations in Germany, Austria and the Netherlands, performed somewhat better, with sales up ?200,000 to ?4.6m, although operating profits remained flat at ?500,000. HAN in Germany, which last year incurred substantial losses, broke even in the first six months and is set to return to profitability in the second half. It recently won a ?1.5m contract with the Deutsche Bundespost to supply computer-aided design software and services over a two-year period.
Austria badly hit
Distribution operations in Austria and the Netherlands were hit by competitive pricing levels, which meant that profits were below target. Austria has been particularly badly hit by falling demand for hardware and training, with software sales on Hewlett-Packard kit virtually drying up, especially in Eastern Europe. Income from outside of Austria was decidedly down, and within Austria, flat. Although HAN traditionally has a better second half, cost-cutting is to remain a priority. Kewill’s US operations turned in largely flat operating profits of ?200,000,on revenues that fell ?200,000 to ?1.2m after the resignation of five top sales staff. Sales at the start of the second half are reportedly roughly the same as the comparable period last year. Even in the UK, the heart of the business, had mixed fortunes. Turnover dropped 6.3% to ?4.5, while operating profits fell ?200,000 to ?1m. Kewill-Micross, developers of manufacturing control system, Micross Elite, had a bad first quarter. Second quarter sales were roughly in line with those of the comparable 1991 period, as are forecasts for the third, but new business levels have reportedly improved since last year. Sales of the high-end Power Systems Elite accountancy product were very steady, but Omicron financial and accounting software sales were slightly down. Pick software house Trifid showed a profit of ?600,000, with a workforce pruned to 25, proving there is ‘life after death’. It suffered during 1990 and 1991 when Prime Computer, McDonnell-Douglas and Bull abandoned their direct sales outlets; it subsequently adopted a Pick-under-Unix approach with IBM Corp. Kewill is continuing to invest heavily in its Unix accountancy software, XIS, and expects revenues at Kewill-XIS to double in the coming year.
