Continuing chip glut hits Eurodis

Components distributor Eurodis Electron has issued its second profit warning in six months as supply continues to outweigh demand in the European semiconductor market.

Last week, Eurodis chairman Robert Leigh said the distributor anticipated its year-end results for 31 May will fall short of its current forecasts. As a result, analysts have cut their forecasts from #9 million to #5 million.

Leigh also attributed the shortfall in profit to the continuing strength of sterling against other European currencies.

The profit warning came six months after Eurodis issued one for its first six months results, after revealing that sales were well below expectations in November 1996. At the time, Leigh claimed that the ?worst was behind us?.

In its year-end results, the pan-European electronic components distributor expects to cut #1million out of its running costs by restructuring its IT system. But it should see the benefits of its recent #3.8 million acquisition of French electronic components distributor Omnitech Sertronique, doubling the group?s sales in France.

Leigh expected the market to grow at about five per cent for the rest of the year, with Eurodis? growth coming in the second half of the year and making a full recovery by 1998.

Sue Cox, a broker at UBS, said: ?Eurodis is doing all the right things by reducing its operating expenses. Everyone with European profits is hit by currencies and is suffering in the same way.?