Amstrad reshapes after more losses

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AMSTRAD, Alan Sugar's struggling electronics company, is to reorganise its businesses into autonomous units to help it decide which divisions are viable. The restructuring follows another year of heavy losses.

Mr Sugar, chairman, said greater transparency might lead to the company severing links with consumer electronics, the traditional core business that popularised the personal computer but which still makes big losses.

Stock write-downs of pounds 6.9m in consumer electronics and a pounds 4m charge to cover redundancies in Europe contributed to a loss in the year to June of pounds 19.9m, compared with a pounds 20.5m loss in 1993.

Mr Sugar said: 'The market condition throughout Europe in the consumer electronics industry remains depressed. Our margins are under constant pressure.'

At the trading level, before exceptional items, the result represented a marked deterioration. Operating profits from continuing operations in 1993 of pounds 15m from sales of pounds 308m were reversed into a pounds 17.3m loss from sales of pounds 217m.

David Rogers, chief executive since August, said his first concern was to stop the haemorrhage in consumer electronics. It was too early to say whether the division, which lost about pounds 10m last year, would be profitable this time.

Mr Rogers said the first step would be to further subdivide the consumer division into trading and research arms, both of which would have to prove their potential to make profits.

Mr Sugar admitted he had considered simply abandoning the sale of video recorders, satellite dishes, audio equipment and computers.

The rest of the group, acquired since Mr Sugar's failed attempt in 1992 to buy in the 65 per cent of the company he does not own, fared better.

Dancall, the mobile phone manufacturer, is developing a digital phone, with production expected to begin next March. Profits are expected to start to flow in the next financial year.

Viglen, the mail order computer manufacturer, made profits of more than pounds 10m, benefiting from the margins achieved by bypassing retail outlets.

Despite the acquisitions, Amstrad ended the year with net cash of pounds 137m, compared with pounds 167m in June 1993, representing 24p per share.

The shares closed 1.75p lower at 25.25p, almost 20 per cent below the 30p at which Mr Sugar tried to take the company private in 1992.

He said then that his offer was more than the shares would be worth for the foreseeable future and described himself as Amstrad's receiver. Shareholders rejected the offer and he received widespread criticism for trying to buy the company on the cheap.

A one-for-five share consolidation is planned.

(Photograph omitted)