London-based Electrocomponents Plc, which felt the effects of the recession most strongly in the retail and commercial markets during the year to March 31, may sell its loss-making Misco personal computer-related business, chairman Sir Keith Bright reported yesterday in his annual results statement. Group pre-tax profits were down 10% at just under UKP50m on turnover […]
London-based Electrocomponents Plc, which felt the effects of the recession most strongly in the retail and commercial markets during the year to March 31, may sell its loss-making Misco personal computer-related business, chairman Sir Keith Bright reported yesterday in his annual results statement. Group pre-tax profits were down 10% at just under UKP50m on turnover down 5% at UKP395m. Turnover figures includes UKP7m this time and UKP48m last time from operations which have now been discontinued. The industrial division, the RS Group, suffering the least from the depressed economic climate, maintained a trading profit of UKP60m on revenues up 10% at UKP275m. Pact International, operating in the retail sector, saw a 54% drop in trading profits on sales that slipped 2% to UKP41m. Misco Group, tackling the commercial personal computer battle ground, incurred an operating loss of UKP3m, against UKP2m profits in the previous year, on turnover down 3% at just under UKP72m. The losses are attributed to restructuring costs – amounting to UKP3.6m – and general competitive and recessionary climates in North America and Europe. The board of Electrocomponents has decided that the ill-fated business might be better off being owned by someone else, or supported in a joint venture arrangement with a third party that can supplement Misco’s offerings with complementary skills and products. Discussions are currently being held to that end. A net provision of UKP15.3m has been made in view of the decision on Misco, which, together with UKP9.1m goodwill already written off on acquisition in accordance with the new accounting requirements, has been included in the results as an extraordinary item. The RS group activities have provided the sole source of encouragement, the above results having been achieved despite an increase in overheads associated with the opening of the new RS site at Corby, payment of rates as a result of the termination of the Corby Enterprise Zone and a budgeted loss of over UKP3m charged in the start-up of RS Germany. During the year, RS Components Ltd was reorganised into two divisions, RS Components UK and RS Components International. The former saw a gradual improvement in UK sales from late August on, building confidence that the recession is finally bottoming out. The introduction of Mechanical Products into the November 1991 RS catalogue has also contributed to growth. RS Components International experienced a year of growth, following expansion into Germany and the development of the former Verospeed companies in France and Austria, acquired in 1990 – these now trade under the RS Components name. RS Australia continued to reel from the recession down under, though the Antipodean situation seemed to pick up in the second half. On April 6, the new Copenhagen sales office began trading, with shipment from Corby. The next region where RS intends to plant will be Italy this autumn, which will host an outlet similar in principal to the German business. At Pact, the retail market continued to be difficult with strong pressure on margins, particularly from Do-It-Yourself companies. Again, however, Sir Keith pins his hopes on an upturn in the not-too-distant future. Mesa Distribution in the US was, as reported, sold last October for $3m – the UKP700,000 loss on realisation has been included as an extraordinary item, as has a UKP5.9m write-off of goodwill associated with the acquisition of Mesa. Some assets remain to be sold at the Electro Lighting Group Ltd subsidiary, whose warehouse was finally sold off – for UKP9.5m – in March (CI No 1,803). Group capital expenditure during the year was lower than usual at UKP8.5m, most of which went on routine items at RS Components.