Thailand floods force Pace to warn on profits again
Nick Clark is the arts correspondent of The Independent. He joined the newspaper in June 2007, initially reporting on the stock markets. He has covered beats including the City, and technology, media and telecoms and made the switch to arts in December 2011. He has also contributed articles to the sports section.
Friday 21 October 2011
Pace, the largest set-top box maker in the world, has suffered the effects of the severe flooding in Thailand as hardware delays forced the company to warn on profits yet again.
The UK company has endured a torrid 18 months since David Cameron launched his economic manifesto from the group's Yorkshire headquarters.
Yesterday it slashed profit forecasts for the third time since the Prime Minister's visit. The shares fell 13 per cent as Pace said the disruption to hard disc drive production in Thailand could slice as much as $9.5m (£6m) off its profits. Thailand is a centre for production of the hardware, and Western Digital is Pace's major provider. Western Digital said on Wednesday it was "at this point not in a position to establish when they will recommence operations".
Pace's management said the company would now miss its previous guidance of between $150m and $170m for the year. Ian Robertson, an analyst at Seymour Pierce, said: "This is not something Pace could have foreseen, nor something it could really have found many ways to work around." He added: "The sales are not being lost to competitors as everyone is in the same boat."
The share price tumbled almost 40 per cent in May, when the group's supply chain was hit by the earthquake in Japan as well as inventory issues and a poor performance in its European operations. Just two months earlier, 20 per cent of the value had been wiped off the shares after the firm admitted a major customer had deferred an order. The news had not been revealed in the annual report the same day.
Altium's analyst Arun George said: "Confidence in the management remains fragile due to three profit warnings." He said all eyes would be on the growth plan presented by its new chairman Allan Leighton next month. Pace overtook Motorola to become the largest global set-top box maker last year.
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