CML Microsystems Plc’s shares took a dive yesterday as it posted a poor set of results. At the interim stage, chairman George Gurry thought it unlikely that things would improve much in the second half, and how right he proved. Pre-tax profits at the Witham, Essex-based electronic systems supplier were down 16% to ú3.8m from turnover up only 5% at ú19.8m. Gurry said in his statement that he would not pretend to be satisfied with the results, which contributed to the 14 pence fall in the shares to 139 pence by lunchtime. After a fast start, the traffic division Microsense Systems Ltd skidded off the road and the US semiconductor business MX-COM Inc suffered a downturn in sales late in the second half. Delays and uncertainty caused by the trend towards privatisation of local authority’s traffic reponsibilities were blamed for some of the problems at Microsense. While the traffic equipment side fared better, with contracts for product development and supply new products being signed, volumes were depressed and margins squeezed too tightly. The field services business posted a loss, due mainly to costs related to the integration of acquisition. Appropriate cost reduction measures are being taken, though the benefits will not show in the first half, said Gurry. The semiconductor business suffered from a decline in sales to the communications market in Japan by MX-COM in the US and the strength of the yen. But domestic US sales also took a step back, as Gurry put it. Long-term prospects, he insisted, were good in semiconductors, particularly in the digital wireless data market in the US, but he was sceptical about much improvement this year. Back home, Consumer Microcircuits performed poorly in western Europe, but better in the Far East, with a Singapore subsidiary being established during the period. Since the year-end, distribution arrangements have been overhauled at the company. Radio Technology Ltd, which designs and manufactures data communications equipment, achieved its first, albeit small, profit after being restructured. The acquisition of Integrated Micro Systems Ltd last July for ú400,000 (CI No 2,453) has been one of the few positives for CML, bringing new silicon chip designs to the group, and good progress is expected. The first half has not started too well either, and Gurry warned that profits might show a decline, but he expects an upturn in the second half. But once again, unforeseen circumstances might put a dampener on that, as they have a knack of doing. Prospects for the year look decidedly shaky, although Gurry insists that in the long term things will work out at CML. The final dividend rises from 6 to 6.1 pence, a show of confidence in the company’s future, Gurry said.
