Acal looks for efficiency as sales remain flat - Embedded.com

Acal looks for efficiency as sales remain flat

LONDON — Sales at pan-European distribution group, Acal, have dropped 2% to £124.4million in the first half of the year to September 30. Chairman John Curry, said the this period has seen a continuation of the demanding market conditions encountered last year but “the company continues to make an adequate return on net trading assets (30% per annum for the half year) although not an adequate profit return on sales”.

At constant exchange rates overall sales were flat compared to last year but the company’s components divisions say 12% sales growth with EBITA up 33%, but this has been offset by a 12% reduction in sales and 25% EBITA reduction in the IT divisions.

Curry said the principal reason for the reductions was a combination of competitive pressures on prices and gross margins of existing IT products coupled with slower than expected introduction of new products.

Acal is a group of 24 principal trading companies, ten of which are based in the UK. With other operating companies in the Netherlands, Belgium, Germany, France, Italy, Spain, Scandinavia and the USA.

The Electronics Components division has seen supplier wins and current suppliers extending geographical coverage. “There is some progress in the defence, aerospace, security, medical and industrial markets, and even some signs of improving activity in telecoms,” said Curry.

The Industrial Controls division continues to provide growth, particularly in the Far East, with some help from the weaker dollar. Within our IT Products division, after a period of sustained growth the Storage Networking business is experiencing significant price erosion and margin pressure which is preventing growth. It continues to produce satisfactory returns as does the Document Imaging business although sales were flat there.

The other IT products, which include network and security offerings as well as computer components in the Netherlands, have however experienced a decline in both sales and profits.

In the IT Parts Services division, CPI continues to perform well and ATM has moved to a new location and is now through the period of investment in new management structures, facilities and IT systems.

The group is going through some changes and Curry said it was his intention to continue as chairman for a couple more years but unfortunately, ill health has affected these plans and he will retire by the AGM after 18 years at the helm in partnership with Tony Laughton. Richard Moon joined the board earlier this year with the intention of taking over as chairman in due course and he has become non-executive deputy chairman.

The group is reorganising both its UK Electronic Components and IT Product businesses to provide a broader product offering from each entity.

The UK Electronic Components Division currently consists of five autonomous companies – Acal TC, Acal Radiatron, Stortech, Acal Technology and Acal Electronics. Acal Technology and Acal Electronics are to merge by April 1 and Steve Sydes now has two roles within the Acal Group – firstly continuing as managing director of Acal Technology and secondly as divisional director, Electronic Components UK.  In this role he has overall responsibility for all Acal’s UK electronics companies, replacing Richard Allen who left on November 5, 2004.

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