Eurodis Electron Plc believes the worst part of a huge slump in the electronic chip market is over and it is now preparing for a slow recovery to resumption of the profit growth it has enjoyed in recent years. The Reigate, UK-based European distributor of chips has reported net profits down 84% at 2.0m pounds. Revenue rose 17.4% to 151.7m pounds, while pre-tax profit fell 78.3% to 3.1m pounds and earnings per share fell 89.9% to 2.66 pence. Chairman Robert Leigh says that the company was expecting to see results similar to those it has reported owing to depressed conditions in the electronic component market, and commented that it was very difficult to predict the rate of any recovery. With production capacity that grew faster than demand, the European market declined for the first time between 1995 and mid-1996. The company’s results were improved from the 9.5m pound profit made on the sale of the Australian and New Zealand side of the business, but hampered by the decline of European currencies against sterling. Eurodis closed its Swiss head office in April and subsequently has had to consolidate its management structure, and emphasis has been placed on tigher controls of operating expenses and capital. The acquisition of Mescom SpA in Italy, made for 6.7m pounds in June, took longer than anticipated and added to existing problems. However Leigh is confident that the market will recover in the near future. He said: We believe the worst is now behind us. The general view is that the market will be back in its normal growth pattern by the end of 1997. The company proposes to pay a dividend of 1.95 pence per share on April 7.
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