Morse sends warning as profit dips

Reacts to 'challenging' market conditions

Reseller Morse has warned of "challenging" market conditions ahead after reporting a drop in profit for its latest financial year.

For the year ended 30 June, the company reported a profit of £19.2m compared with £22.9m last year. Turnover had increased by 16 per cent on last year, from £506m to £586.1m. The company's Professional Services division was the most successful part of the business, increasing its turnover by 58 per cent.

"We have made good progress with the two main thrusts of our strategy: balancing our services and infrastructure businesses within our technology integration model, and growing into a truly pan-European business," said Richard Lapthorne, Morse's chairman, in a statement.

The company said it is continuing to invest heavily in strategic partnerships with Sun, Hewlett Packard and IBM, and had also seen steady growth in its UK infrastructure business, especially in the north.

However, the company added it had been forced to take action "to ensure costs reflected the trading environment" and that early conditions had forecasted a "challenging" new financial year, with subdued activity in the other countries in which Morse operates.

Its partner Sun offered little cause for optimism after the vendor warned last week it would be a "real stretch" for it to hit its break-even target for its current quarter.

"It will take a very large September in terms of demand to hit the break-even point," said Michael Lehman, Sun's financial director. "At this stage I would not count on that happening."

He added that results in Europe and Asia had been much lower than expected.

• Distributor Tech Data reported a profit of $27.2m (£18.6m) for its first fiscal quarter, ended 31 July, down from $40.8m in the same period last year. Turnover had fallen from $5bn to $4.1bn year on year.