Having been dogged by supply problems Densitron International Plc is now feeling pressured by an overly strong yen which has eroded interim profits. The Biggin Hill Kent-based company reported profits down 5.4% at ú383,000 on turnover down 16.8% to ú24.3m. The Japanese business has now became a loss-making activity due to the fact that Densitron […]
Having been dogged by supply problems Densitron International Plc is now feeling pressured by an overly strong yen which has eroded interim profits. The Biggin Hill Kent-based company reported profits down 5.4% at ú383,000 on turnover down 16.8% to ú24.3m. The Japanese business has now became a loss-making activity due to the fact that Densitron components ordered by Taiwanese companies are bought from Japan at prices that reflect the soaraway yen. The company said the Japanese business was unlikely to become profitable until the second half of next year. Sales were down 54.8% with orders falling 51%. A reduction in overheads and the introduction of new products into the Japanese market were seen as the means to remedy these losses. However Densitron said that all other sections of business were profitable. Despite capacity constraints, the company’s Microwave business continue to increase its profits although Densitron said that capacity would be expanded now that it had a new factory. Sales more than doubled and orders were up 106%. The US business saw a welcome growth with sales up 7.7% and Densitron said that it was confident that this growth could be sustained year by year. However, profits from Hitech Electronics Corp, the company’s joint venture in Taiwan, saw a reduction in profits. This, again, was due to the price of the yen, which drove the price of components up. Densitron said the business should begin to recover in the second half. The computer supplier and display manufacturer remained stoic saying that UK sales had been a little disappointing but continental Europe were reported to be remarkably resilient despite difficulties in Italy and Germany. Densitron France, Densitron Australia and Densitron Taiwan were singled out as areas of significant growth and profitability. Densitron has agreed to sell its 50% stake in SkyLabs SA back to the parent company since it no longer fits into its corporate strategy. However, it said that the sale of shares would not affect year end figures as this money had already been accounted for. Chairman, Cliff Hardcastle remained optimistic in his chairman’s statement saying that the policy of reducing high volume low margin business in Asia had paid off and increased gross margin from 28% to 34.7%. He pointed to improved second half figures. The board recommended an interim dividend of 55p, 10% up on last time. The share price was flat at 37p.