Northamber: Turnaround will take some time

Distie's revenue drops by a fifth in year to date

Loss-making distributor Northamber has warned that its turnaround "will not be immediate" in a typically lugubrious trading update.

The broadliner revealed in an interim management statement this morning that revenue for the nine months to 31 March was down 20 per cent on last year, with operating losses also rising on an annual comparison despite efforts to trim its cost base and move to higher-margin products.

Northamber said it had been badly stung by the recent plunge in PC sales – Gartner figures released today suggest the western European PC market plunged 20.5 per cent in Q1.

This decline – along with the accompanying price and margin erosion – shows no sign of abating, Northamber cautioned. It held up IBM's reported move to sell off its X Series server business and Siemens' decision a few years back to terminate its stake in its PC partnership with Fujitsu as evidence of the effect the trend is having on vendors. Note that, perhaps poignantly, both IBM and Fujitsu recently terminated their relationships with Northamber.

Northamber said "significant" cost savings have been and are being implemented, with operating expenses falling by 14 per cent year on year in the period. That is after taking account of some exceptional "very significant redundancy and related costs", it said.

CRN also understands that several staff have handed in their notice to join rival distie Enta, which is setting up a southern office, while new chief executive Peter Hammet has spoken of the need to reassess its product line-up and the way it interacts with customers.

But despite the sombre mood music, Northamber insisted that it is in a strong position to reverse its fortunes.

"While the update on our trading position is not comforting and a turnaround will not be immediate, the outlook is not all gloom. There are opportunities available which we shall endeavour to maximise over the shortest time feasible," it said.

"The very considerable core strength of our totally tangible asset base, including annual formula depreciation, is such that we are not restricted in being able to effect change."