Pace warns on profits as Japan quake hits supply

The set-top box maker Pace stunned the market yesterday with a warning on profits after it was hit by the supply chain issues exacerbated by the earthquake in Japan. The news wiped £190m off the company's value, almost 40 per cent, as the shares closed at 93p on the day.

The warning came just two months after a significant US customer pushed back its order from 2011 by a year and adds to something of a fall from grace for the company.

Pace overtook Motorola to become the largest set-top box maker last year. Shortly afterwards it was heralded by David Cameron, as the Prime Minister launched his new economic strategy for the UK from the company's headquarters in Yorkshire.

Pace revealed yesterday that a poor first quarter had forced it to slash full-year profit expectations from £128m to as low as £97m. Neil Gaydon, the chief executive, bemoaned a "disappointing start to the financial year".

He said: "Although we will now not be able to make up this first-half under-performance in the second half we continue to drive long-term growth and profitability. The demand for our products and technologies continues to grow, ensuring our ongoing market leadership."

The interim management statement did report a 24 per cent rise in revenues during the first quarter over the previous year earlier. Yet profits were hit by supply-chain issues. Costs had soared as it built up inventory and bought components ahead of schedule. Yet the supply chain was hit by disruptions following the natural disaster in Japan, which has "increased risk for the year".

Pace's management admitted that profitability in its European arm, bought from Phillips in 2008, was below expectations despite hitting revenue and volume targets on the supply-chain issues and what one source called the "lack of efficient running of the business". The poor performance of its Pace Networks arm, which was designed to allow pay-TV companies to target hard-to-reach customers, also dragged on the bottom line, forcing its closure last month.

Altium Securities' analyst Arun George said the statement stood in "stark contrast" to the performances of Pace's two closest rivals, Motorola and Technicolor. He said Pace's statement "offers a list of reasons that contributed to the lowered margin expansion, none of which seems credible".

Mr George said the company needed to "refresh" its leadership team, even though under Mr Gaydon's stewardship Pace had risen from the brink of bankruptcy five years ago to the biggest set-top box maker in the world.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

Twins have a mountain to climb during Tour of duty

Yates brothers will target the steepest sections in bid to win a stage in France
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy