Ideal rises on "strong trading"
Market is stabilising
Storage specialist distributor Ideal Hardware saw its shares rocket by 25p this morning following the release of annual financial results. Ideal, which issued a profit warning back in April and saw its shares nosedive, has reported a £8.71m profit for the year ending 31 July 1998, compared to £9.71m in 1997. Turnover for the period rose £230m from £189.5m the previous year. Earnings per share were 28.13p, giving a final net dividend of 8p per share. Chairman Richard Jewson warned in March this year that profits would be around the £9m mark, well short of the previous market expectations of £12m. He blamed market volatility in the first half of this year for the decline in earnings, a move which prompted Ideal to reshape its salesforce and sales structure. The company has now completed its move to Cox Lane in Chessington and has bought additional sites adjacent to its current building, for further expansion. In the second half of the year, Ideal reported that sales were up by 18.5 per cent and rising, a fact that the City appears to have blessed. Jewson said that "the market is now stabilising" and that "strong trading has continued to date." He cited an IDC report which claimed that corporate data storage requirements are set to increase by 50 per cent over the next year. The company claimed it is also within its 13 to 15 per cent target for gross margin, which now stands at £13.6m, despite "product over-supply" in the market. European sales accounted for £36.5m of turnover, although low margins in Europe have lead the company to establish a foothold on the continent to deal with volume supply on a more local basis. ®
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