Brammer warns of loss after writedown

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The Independent Online

The components and electrical equipment supplier Brammer yesterday warned it would have to make a £21m to £24m writedown as demand for its kit dried up.

Shares in the company, which stated two months ago that it would have to make a provision, fell 13.5 per cent to 211p. Analysts had been expecting the exceptional charge to be about half what Brammer announced.

The bulk of the figure, some £20m to £23m, relates to the writedown of the value of testing equipment that the company's Livingston business rents out to telecoms firms. The extra £1m charge relates to the closure of another unit.

However, analysts questioned whether the writedown was large enough and whether Brammer would have to make another provision later in the year. The company had invested heavily in the equipment when demand was strong and had failed to react quickly enough to the weakening market conditions, they said.

Despite the shock, the company said its 2001 pre-tax profits, before goodwill, amortisation and exceptionals, would be £19m to £20m – slightly ahead of most analysts' forecasts. A solid performance from its industrial services arm partly offset the weakness at Livingston, although analysts questioned whether a lower depreciation charge had also helped.

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