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September 17, 1990

MEMEC’S INTERNATIONAL DIVERSIFICATION STRATEGY BEGINS TO PAY OFF

By CBR Staff Writer

Components and systems supplier Memec Plc’s investments in new markets and new products is finally starting to pay off, with interim results showing good growth in both revenue and profits. The figures will come as a relief to Memec’s faithful shareholders, who saw profits fall by a fifth in 1989: their patience was duly rewarded yesterday with an interim dividend of 1.65 pence. In the UK, both the components and systems businesses gave good accounts of themselves, while sales in West Germany – which make up 20% of total revenues – were boosted by the improved performance of the Metronik Systeme systems division. The newly-acquired French subsidiary, Newtek, contributed a profitable UKP3.0m from sales of its telecommunications and industrial components. Increased expansion costs – including the establishment of a sales operation in San Jose – and continued margin pressure meant that the US operation ended up making a loss, while the small South East Asian arm was able to turn in increased sales and profits. Keeping one eye on potential markets in East Europe, Memec has established a one-man sales division in East Germany, and a three-man Jugoslavian office. Despite pessimism from Memec about market conditions in the US, the shares rose 6 pence to 161 pence.

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