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April 19, 1994

DENSITRON SLUMPS 40% AT PRE-TAX LEVEL AFTER DISPLAY MAKER LETS IT DOWN

By CBR Staff Writer

Densitron Plc, the display manufacturer and personal computer supplier from Biggin Hill, Kent, has not yet resolved its supply problems with several large Taiwanese customers. The company, which in October said that the delivery of several large orders would solve its profit problems (CI No 2,275), is being held up by one display manufacturer, which is itself flooded with orders. As a result Densitron is having to rely on its other dealings, which obviously aren’t keeping it afloat. The firm, which saw a 32% reduction in pre-tax profit in October’s interim, has again seen pre-tax profits fall, this time by 39.5%. The firm points to bad US results as part of the problem, even though US profits are 25% ahead of what they were last time. The US now accounts for about 30% of group sales and profit. It said that the increase in sales and operating expenses (admininstration costs rose 24.1% to UKP10.2m), is mostly due to exchange rate changes. The company, which sells personal computers to the Japanese market, is currently making just under UKP1m from this market and hopes to see it increase to UKP2m by the end of the year. If, as it predicts, the supply backlog is cleared in July, we could see it open a floodgate for profit, although it is unclear how much goodwill or business will be lost by then. Meanwhile the company is seeking to get compensation from its tardy display supplier, which it is nobly refusing to name, and is hoping to supply Taiwanese customers with some sort of recompense, too. The firm is offering a scrip alternative to the 1.0p final dividend – an alternative that chairman Cliff Hardcastle is himself taking with predictable gusto.

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