Alan Sugar was disappointed enough with Brentwood, Essex-based Amstrad Plc’s results at the year end, his hopes pinned on the company’s cash pile of UKP60m to get it through the recession, but the first half of 1992 has been worse than anticipated, with ugly red figures showing on the company’s profit, or rather loss account. Pre-tax losses of over UKP15m were the bad news, against UKP40m profits last time, as sales crashed by 40% to UKP196m. This is the first time Amstrad has ever reported a loss, Sugar reports, almost disbelievingly. The dramatic reduction in sales volume, he explains, can be partly explained by (Amstrad’s) departure from the non-profitable games playing and entertainment computer business – traditionally a strong sector. Withdrawal from this sector also meant that Amstrad did not benefit from its traditional Christmas boom. The company also stood back from the more competitive sectors of the personal computer market, not approving of the continuing trend towards price dumping. Back on Christmas, the festive season helped clear the heavy (video recorder) inventories that existed across Europe. Satellite business remained buoyant, as did that of its word processors and facsimile machines. And Sugar reckons there is some hope that Germany is slowly emerging from tough trading conditions, especially in the satellite sector. More restructuring of the company’s UK and continental distribution is planned, which it is hoped will further reduce the company’s overheads. This rationalisation programme is expected to be complete by June 30, and it is hoped it will clear the way for a more stable 1993. Amstrad still has UKP40m net cash, to which Sugar clings in these uncertain months. Finally, Sugar wants to stress that Amstrad has no intention of giving up (its) position in the computer market, believing that his firm is managing to weather the storm in which too many manufacturers were chasing the same recession-affected consumer market.
