Displays manufacturer, networking and services outfit Microvitec Plc has issued a trading statement warning that first half losses are likely to be far worse than expected and it is blaming it on the strength of the pound. The company said first half losses are likely to be at least 3m pounds before tax, wiping out money made from the sale of subsidiary companies. The axing of 50 permanent and 50 temporary staff in May, which cost 200,000 pounds, and the sale of loss-making subsidiaries CSM Ltd (CI No 3,154) and MSI Ltd for a total of 7.3m pounds towards the end of the first half of the year, had little impact on first half interest charges. With a majority of the Bradford, Yorkshire company’s display products exported to Europe and the US, where interest and currency rates are lower, the company is finding that it is just not making a profit. Importers in those areas are also finding it increasingly cheaper to purchase goods from places such as Korea and Taiwan, adding to Microvitec’s problems. Company chairman James Bailey said it is not a case of the company making any errors and it has now reached a double whammy situation where the company has got rid of jobs and cut sales. But it is not all doom and gloom. Microvitec believes the situation is likely to improve in the next half and, with an annual saving of #1m from the job cuts, it should be back on track. Microvitec’s Canadian subsidiary, which deals with the networking side of the business, has managed to haul itself back to profitability and is doing well, turning the company’s focus towards the data communications arena (CI No 3,125). Bailey said the strength of sterling is affecting a lot of companies in the UK, but he believes the future will get brighter.
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