Sevenoaks, Kent-based office equipment supplier Erskine House Group Plc has continued to experience a slide in performance during the year ended March 31, reporting pre-tax profits down 22% at UKP12m on turnover that declined 15% to UKP190m. The recession across the Atlantic hit particularly hard, and the group’s largest operation, in the US, turned in pre-tax profits down 53% at UKP4.9m, falling below those reported by the UK operation – which contributed profits of UKP6.3m, up 38% on the year before. Revenues generated in the US fell 14% to UKP104.7m, while UK turnover was down an uncomfortable 20% at UKP76.2m. The UK copier division, now trading as Erskine Ltd, which turned in a disappointing performance in the previous year, saw a 40% rise in profits in 1990-91, but this was still below group expectations, as sales of new photocopiers dropped off in the last four months of the period. Services income, meanwhile, was relativeley flat. In an attempt to turn this division around, Erskine has reduced staff levels by 12%. The office systems division was well short of its profit target, despite a good performance from the Fontware laser-printer software cartridge business. Sales of laser printers and servicing of microcomputers did not generate the level of revenues expected either. But it was the US that really blew the company’s chances of increasing profitability – sales plummeted as the recession deepened, and the weak dollar brought down the results further by the equivalent of UKP700,000. While sales of new machines were dramatically reduced, service income across the water did rise steadily. Cost-cutting included a 9% reduction in staff numbers in the US. Amid the doom and gloom, however, Germany’s relatively minor contribution was almost doubled at UKP9.5m, yielding pre-tax profits up 59% at UKP882,000. Here, where the word recession is not common utterance – not yet anyway, strong profit growth was reported for all three principal subsidiaries. And Erskine is in the process of setting up new operations in the former German Democratic Republic, the benefits of which are expected to show in the current year. Machine sales in Germany rose, as did service income. Group net borrowings were reduced by UKP10m to UKP41.3m during the year, after UKP7.1m acquisition and earn-out payments. Cash balances at the year-end stood at UKP11.3m, mainly held in sterling. A net final dividend of 4.35 pence has been recommended.
