First profit fall clips Fairey's wings

FAIREY, the electronics group, disappointed yesterday by reporting its first fall in profits in its 10-year history and warning that recovery is not likely until the end of the year.

Shares in Fairey fell 30.5p to 293.5p as it posted underlying pre-tax profits of pounds 30.5m, down 40 per cent on comparable figures for the previous year.

John Poulter, Fairey chief executive, said the drop was largely the result of the slump in the semiconductor market, which was hit by overcapacity. Fairey's semiconductor businesses, accounting for 15 per cent of total revenues, saw sales drop by 35 per cent and profits disappear.

Fairey also suffered from the effects of the Asian economic crisis. Sales to the Asia-Pacific region fell by 24 per cent, while the knock-on effects hit demand in the company's main market, the United States. "US companies saw exports going down and import substitution going up," said Mr Poulter.

Fairey has cut 329 workers, 11 per cent of its workforce, a move likely to yield annual savings of pounds 9m. However, Mr Poulter pointed out that a recovery in profits depended heavily on a recovery in the semiconductor industry.

Fairey is confident that, with the growing use of chips in everything from mobile phones to cars, recovery will take place. "Organic growth in this industry is only a matter of timing," said divisional director Hans Nilsson.

However, analysts were cautious, pointing out that Fairey's relatively short order books made it hard to predict the timing of a recovery. Charterhouse Tilney analyst Michael Blogg has pencilled in full-year profits of pounds 35m. "The last thing they want to do is to make positive noises and find that a recovery is delayed," he said.

However, with shares trading on a multiple of less than 12 times forward earnings, they look cheap. Analysts point to Fairey's strong market positions, as reflected in gross profit margins of around 50 per cent.

This raises the prospect that a larger group could pounce before the shares have a chance to recover. Obvious predators include US giants Emerson Electric and Honeywell, which would be likely to extract cost savings.

Either way, Fairey shares look unlikely to fall much further. "For a company of this quality they are a steal," said Mr Blogg. "But people are going to be wary until they see some evidence of a recovery."

'Irritatingly Disneyfied': fashion vlogger Zoella


Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'
Carl Bernstein (left) and Bob Woodward (right) with former 'Washington Post' executive editor Ben Bradlee

The Washington Post editor helped Bob Woodward and Carl Bernstein bring down President Nixon

ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London