Datrontech stock falls after half-year results

Distributor ?frustrated? by low share price brought on by 14 per cent decrease in pre-tax profits

Datrontech Group?s shares took a nosedive last week as the company reported a 14 per cent fall in pre-tax profit for the half-year to 30 June, taking them near its all-time low recorded last month.

On 4 August, Datrontech?s share price sank to a low of 85p (PC Dealer, 12 August), it fell further on 18 August to 76.5p. It seemed that the company?s shares were set to improve as its share price reached 110p on 28 August. But when it announced a pre-tax profit fall of 13.8 per cent to #3.2 million from #3.7 million last year, despite turnover up 25 per cent to #114.9 million, shares spiralled down to 77.5p on closing last week.

Datrontech chairman Steve King remarked that he was ?incredibly frustrated? by the low share price.

Patrick Orr, analyst at Datrontech?s broker, Panmure Gordon, said the situation was ?a bit unfair?, as the distributor had already issued a profit warning regarding expected poor performance in the second quarter to 30 June, and that the situation had actually remained the same.

In that profit warning, Datrontech blamed its performance on excess inventory of components which had built up over the first quarter, coupled with negligible market growth. ?There wasn?t actually any new bad news,? said Orr.

A statement issued by Datrontech said that its Q3 has shown little improvement, but an upturn in the fourth quarter to 31 December is expected ? traditionally the distributor?s strongest seasonal period.

Meanwhile, the company issued 428,338 shares to Datrontech group managing director Mark Mulford on the condition that he remains with the distributor until 31 March 1998. A further 1.4 million shares will be made available to other employees.