Datrontech issues profit warning as share prices fall
Is it a buy, buy, buy again?
Distributor Datrontech has issued its second profits warning in 15 months, blaming a sluggish performance from the PC assembler market in the UK. Now the group financial director Gerry Connolly is leaving Datrontech with a £115,000 pay-off following the profits warning. Datrontech now expects pre-tax profits of £2.6 million for the six months to 30 June, down from £3.2 million, and profits for 1998 as a whole to be down from £6 million to £5.2 million. The profits warning - which follows similar warnings from other rival distributors including Ilion - drove Datrontech shares down 23p to 60p on the UK stock market yesterday. Chief executive Mark Mulford said that the profits warning came after component sales this summer to UK assemblers were slower than expected. He said that the reason for the slow-down was unclear, but followed overstocking in the channel in Q2. The slow-down meant that the component distributor had to decide whether to try and keep margins up, or to lower prices to try and kick-start the market. Mulford said that Datrontech was trying to maintain margin on components. Ideal Hardware shares also fell 25p to 247.5p.