Datrontech Hit by Sales Slow-down

Distributor issues profit warning as analyst asks if this is start of long-term drop in demand for PCs

Electronics component distributor Datrontech Group was forced to issue a profit warning last week after experiencing a slow-down in growth in PC sales.

Datrontech chairman Ian Kirkpatrick told the company?s annual shareholders? meeting last week that first-half profits to 30 June would be lower than those achieved in the equivalent period last year. As a result, the company?s broker, Panmure Gordon, cut its full-year pre-tax profit forecast from #9.5 million to #7.5 million. Last year, Datrontech had a profit of #8.06 million and a turnover of #207.1 million.

In his statement to shareholders, Kirkpatrick attributed the disappointing results to a slow-down in the rate of growth in UK PC sales.

But he said: ?We remain encouraged by the progress made in the integration of the group?s businesses and the optimisation of sales opportunities throughout our subsidiaries.?

A recent study by market research company Context reported that a 40 per cent drop in PC shipments throughout the UK was expected.

Patrick Orr, analyst at Panmure Gordon, said: ?Q2 demand for tier two, three and four PC assemblers has shrunk dramatically. Datrontech is one of the largest assemblers and it?s natural that it should be hit. It does not appear that its market share has declined at all.?

He claimed it was too early to tell whether the fall in demand represented the beginning of a long-term decline, or whether it was merely a blip, but said Datrontech?s recent spate of acquisitions had enabled the distributor to spread its risk and ride out any possible further downturn in the assembly market.

In January, Datrontech bought Essex-based recycling firm RDC for #5 million and training reseller Xenon for #3.7 million to boost its services offering (PC Dealer, 29 January).