AB Electronics Group Plc saw its pre-tax loss deepen to #3.9m from #3m for the six months to December 31. Turnover at the company was #87m, a fall of 24.5%. The Abercynon, Mid Glamorgan-based company operates four divisions, and with the exception of Components, all saw losses deepen or profits erode. Components contributed #24.3m to revenue, down from #28m, but the loss improved to #1.46m from #1.51m. The Automotive sector saw profits fall to #202,000 from #679,000, and turnover decreased to #20.6m from #21.1m. Income from Assemblies plummeted to #686,000 from #1.45m on turnover that fell to #27.9m from #39.5m. Losses at Resale & Distribution deepened to #325,000 from #208,000 and turnover was #14.7m, up from last year’s #11.8m. AB says that the second half has made a slow start and sales for the period will be slightly lower than the first six months. Consequently, the fall in turnover will prevent the group returning to profitability in 1991-1992, and the company will report losses for the full year. While AB Electronics acknowledges that the results make gloomy reading, it stresses that the loss before an exceptional item of #1m, worsened by #900 to #2.9m, although sales dropped by #28.4m. The company says that its strategy is to focus on core businesses, and it believes that 15 sites in the UK and the rest of Europe are too many; its market coverage is too broad; and too few businesses are above critical mass. The company has cut its headcount to 3,989 from 6,177 in June 1990, and it does not rule out further reductions. AB is planning to establish manufacturing partnerships for its various divisions, and is setting up a manufacturing plant in Czechoslovakia that will partly service the German market. AB does not intend to close its German facilities, but it complains that the labour costs are escalating, and this means implementing more automation and shifting labour-intensive work to other countries. AB says that its strategy will be put in place over a period of time, and refuses to say if it will withdraw from those businesses that are not core. It says that it intends to stay with those that offer value in terms of profit and cash-flow. Even if a business is loss-making at present, that does not mean that it will be wholly-divested. The group’s gearing rose to 83% from 74%, but that is down to a reduction in shareholders funds, not a manifestation of increased borrowings.
