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February 23, 1993


By CBR Staff Writer

Despite the gloomy predictions, Brentwood, Essex-based Amstrad Plc has actually hauled itself back into profit. The surprise news caused shares in the the company to rise four pence to 29 pence on a turnover of 2.9m shares – just a penny short of the price chairman Alan Sugar offered in his abortive buy-out bid last year. The company saw turnover, including acquisitions, rise 3.1% to UKP202.2m during the six months to December 31 and pre-tax profits were UKP5.6m compared to UKP12m losses last time. Mr Sugar’s sombre statement does little to confirm that the company’s troubles are over, however.He reminds shareholders that the results have been achieved during Amstrad’s traditional best selling season and that current trading conditions, particularly in the UK, remain difficult. The devaluation of the pound against the US dollar and Japanese yen is leaving the company with no option but to increase prices across the board, which will likely result in a downturn in consumer demand for those products which are retail price sensitive. Current prices, Sugar claims, are unrepeatable. This does not bode well for satellite dish sales, which have remained buoyant in the UK and Germany on the strength of competitive retail pricing – or the fate of Amstrad’s already struggling personal computer business, which was said to yield low, and in some cases zero, margins. On a brighter note, facsimile and audio sales have achieved reasonable growth. And the company’s balance sheet remains strong – with some UKP111.9m cash reserves available. Rationalisation is continuing with UKP7.2m having been put aside, largely to cover the restructuring of the company’s Spanish subsidiary. Other overseas operations could also be looked at. Investment will also continue in research and development. The company is continuing to develop potential new products and is to concentrate on those product categories thought likely to offer long term profit margins. This could result, medium term, in reduced turnover, Sugar warns adding that the company is aiming to maintain a break even position in the second half. In line with the policy of paying dividends from profits, an interim figure of 0.2 pence has been recommended – the final figure will depend on second half results.

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