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Datrontech posts interim profits fall

Memory and components outlook unlikely to improve short term

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Datrontech saw profits fall by 19 per cent for the six months to 5 July, as memory prices plummeted and its UK components business also performed below expectations. Memory sales at the distributor were 48 per cent down on the previous year, but the results were boosted by profitable networking, storage and service business. Overall, turnover was up 6 per cent to £133.9 million for the half-year, with profit down to £2.6 million from £3.2 million. Interest charges paid by the distributor were up, as a result of higher interest rates and borrowing. In the first six months the interest charges were £15.4 million, compared to £8 million for the six months ended 31 December. Datrontech has warned that the performance of the memory and components business is unlikely to improve in the short term. The outlook for these divisions in the second half of the year has been downgraded. Speaking earlier this month, Datrontech CEO Mark Mulford said the problem with the UK components market was unclear, but he noted demand from system builders for components had been slow over the summer. Mulford said that over-stock in the channel in Q2 also contributed to the slow-down. The networking, storage and service business, where margins are significantly higher than the memory and components business, posted 37 per cent growth to £30.3 million after including the networking business of ICP, its recently acquired Dutch subsidiarr. ®

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