Ilion faces prospect of further drop in profits

Ilion has been forced to issue its second profit warning in six months, after admitting it had a disastrous April when its share price plummeted by 80 points.

In a statement released on 14 May, Ilion admitted it did not expect to meet pre-tax profits of #8 million for 1998, citing the volatility of the market as a factor in the lower expectations. Instead, the distributor's broker, Beeson Gregory, anticipated hitting between #4.5 million and #7 million in the period to 30 June.

The Chessington-based distributor's shares dropped from 188.5p to 109p by market closing on 18 May, following the warning.

The company issued its first profit warning in November last year when Ilion cited Azlan's failure to react to market changes (PC Dealer, 26 November 1997).

According to Wayne Channon, chairman of Ilion: 'A range has been predicted because the market is unpredictable. I wish Beeson Gregory had done this at the beginning of the year.'

He added: 'We will ensure actions are taken to protect this position, albeit at the expense of short-term profitability.'

But talking to PC Dealer, he refuted the possibility of swingeing cuts to tide the company over: 'I am not going to slash costs I could go short-term and slash overheads but it would be wrong. We don't have to do anything, we don't have a problem.'

However, Channon cited the low growth in Ilion's UK sales at 22 per cent as being due to 'a sign the sector is not recovering'. Sales growth of 40 per cent had been expected.

Azlan, which announced a shortfall in profit for the second half of its financial year, was unavailable for comment.