Kenwood hit by worsening markets
Thursday 25 March 1999
The warning is the third in a year for the group, which is undergoing a big restructuring in an attempt to reverse a five-year slide in its share price.
Kenwood said the poor trading conditions, combined with the strength of sterling, meant it would make a pre-tax loss in the six months to 2 April, while the full-year figure should be "around break-even". No dividend will be recommended.
Profits were also affected by slower UK consumer spending, notably at Kenwood's biggest customer, GUS/Argos, and a string of asset write-downs and restructuring. In two years Kenwood has cut staff by half, leaving around 700 workers.
Colin Gordon, chief executive, said the trading environment strengthened the need to move away from Kenwood's old status as a vertically integrated manufacturer. Manufacturing is gradually being transferred to China.
The warning was the latest in a series of shocks that have left Kenwood vulnerable to a bid. Yesterday the share price fell to 76p, one-fifth of its level five years ago, valuing the company at pounds 45m.
Likely predators include Glen Dimplex, the private Irish company that makes Morphy Richards appliances, and Alba, the quoted electronic equipment maker. UK Active Value, the shareholder activist group, has a 17 per cent stake, and the company turned down an approach from Pifco last year.
The global trading conditions have also affected competitors in kitchen appliances. Operating profit at Morphy Richards this year was down 49 per cent.
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