Memec Plc of Thame, Oxfordshire is suffering from a decrease in gross and net margins due to difficult market conditions. Consequently, it has not been able to match the product and market investments it has made and has seen pre-tax profits slip 17% to UKP3.4m. The news is not all glum, however, as sales grew to UKP49m in the six months largely thanks to geographic expansion and product additions. In the UK sales grew by 21% overall but sales of systems and computer peripherals products were down. West Germany saw sales up by 11% and the group’s new components company, ASP, in particular grew well and will be profitable by the end of the year. IST and CRC GmbH, however, both reported losses at the interim stage – but steps are being taken to remedy their desultory performances: senior management at IST has gone and its system activities have been integrated into those at Metronik thereby saving the bulk of IST’s overheads. CRC on the other hand is a much smaller business and has simply had its focus broadened to include activities at ASP and Metronik. In the US sales grew by 32% as Memec’s Insight business expanded, requiring investment in Dallas and the opening of a new branch in Seattle. Memec also has a small business interest in Hong Kong where it has a distributor, Maxisum, and a sales organisation, Excel. Both sell into Singapore, Taiwan and South Korea and are doubling their sales year on year, although they are not expected to make a significant group contribution for some time. Colin Stevens, Memec’s financial director, said that the market will remain tough for another 12 to 18 months, but that as the loss-making activities had been cut from West Germany and as the group is entering a period of consolidation in the US, profits will start to rise again by year-end.
