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July 16, 1991

HARDSHIP IN THE COMPUTER INDUSTRY HITS ELECTRON HOUSE HARD

By CBR Staff Writer

Electron House Plc, the troubled components and systems distributor, has reported pre-tax profits of UKP968,000, down from UKP4.0m, on turnover of UKP127m, down from UKP130m. Chairman Robert Leigh says that the drop in profits is a great disappointment as he expected to see some growth during the period, but he claims that changes in the economic cycle have been too rapid to avoid pressure on prices and margins, with Bytech Peripherals Ltd said to be the principal cause of the decline in profits. The company has instituted a programme of rationalisation, amounting to some UKP355,000 in extraordinary charges, and this has included merging three operation into other group companies, withdrawal from computer distribution in the Republic of Ireland and the car aerial business in the UK, and the sale of US-based operations. Staffing levels have been reduced, and senior management has been reshuffled. The upshot of these changes is that net profit is UKP259,000, down from UKP1.02m, financial gearing is down to UKP4.4m from UKP5.7m, and Electron House is now focusing on the value-added content of its business. By sector, computer products and systems saw sales decline to UKP82.2m from UKP85.4m and pre-tax profits dropped to UKP2.9m from UKP5.7m. Sales of electric components in the UK were up at UKP33.2m from UKP30.7m, but in Australia and New Zealand they were UKP8m and UKP3.4m, down from UKP10m and UKP3.6m respectively. In the same order, pre-tax profits were UKP1.9m, UKP303,000 and UKP167,000, down from UKP2.2m, UKP859,000 and UKP299,000. As to the future, Electron House believes that market conditions in components and computer services will not deteriorate further. The printer market is relatively stable, and since this represents a high proportion of the business, it should act as a cushion against the worst effects of the problems facing the computer industry.

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