Following four years of full year losses, Amstrad Plc is now back in profit. The company recorded ú2.6m profits against loss of ú18.6m last time on turnover up 13.7% to ú271.6m. Chairman Alan Sugar said that full recovery would not be seen until the consumer electronics business showed profits. Analysts remained wary about the considerably […]
Following four years of full year losses, Amstrad Plc is now back in profit. The company recorded ú2.6m profits against loss of ú18.6m last time on turnover up 13.7% to ú271.6m. Chairman Alan Sugar said that full recovery would not be seen until the consumer electronics business showed profits. Analysts remained wary about the considerably improved figures, believing that it is still too early to say that Amstrad has turned the corner. At its height in the 1980s, Amstrad was valued at $1,600m, it now has a market capitalisation of $474.8m. Wary sentiments were also felt by investors as its share price fell 5p to 251p although it later recovered. Sugar declined to expound the performance of the company’s five divisions – Amstrad Consumer Electronics Ltd, Viglen Ltd, Betacom Plc, Dancall A/S and the recently acquired Dataflex Design Ltd. However, he did say that consumer electronics was still loss-making despite restructuring, redundancies and a ú22m inventory reduction that has cut stock values to ú40m. This was mainly due to a drop in sales of its personal computers and satellite products, 70% of which are sold to France, Germany and the Benelux countries, and was also indicative of a cost base that did not reflect sales, chief executive David Rodgers said. Sugar said the losses in the division as a whole had been curtailed and that it would break even this financial year. The consumer electronics business now comprises three separate business units. Amstrad Trading covers satellites, home entertainment, telecommunications and personal computers, Amstrad Direct is the catalogue business set up in November 1994 to sell directly into the home-consumer market and Amstrad Innovations cover product development, an area which Sugar described as dissapointing in the light of efforts to rescue Jrfalla ICC AB from liquidation (CI No 2,634). Viglen, which Amstrad has a 66% stake in, was more encouraging with sales and profits above plan, Sugar said. Viglin showed operating profits of ú11m and made a ú94m contribution to Amstrad’s revenues. Amstrad’s swedish mobile telephone business, Dancall, was reported to have experienced a four month delay in manufacturing the GSM/PCN telephone. However, Sugar said that production was now under way and the division was on track to produce 800,000 hand-sets per year. Amstrad spent ú8m in capital investments for this division which has now signed deals with six European network operators and three OEM customers. Although Dancall failed to make a profitable contribution to overall figures. The Dataflex business, which was acquired in March (CI No 2,263) was predicted to show quite good results in the next six months although it is currently making a small loss, Sugar said. Amstrad bought Dataflex for its facsimile modem cards, which it plans to sell as an optional upgrade with its own personal computer brands or OEM to other personal computer manufacturers. With ú141.9m in the bank, Sugar said the company was now ready to make for further acquisitions. Having moved into the beauty business via its Ultima Face Care Systems subsidiary the mind boggles thinking about where Alan Sugar’s acquisitive eye will land next.