Sales slowdown hits Premier shares
Wednesday 17 June 1998
Shares in Premier Farnell, which manufactures and distributes electrical components via catalogue, yesterday lost 14.3 per cent to close at 313.5p, 51.5p below Monday's closing price.
The share collapse overshadowed the appointment of ICI's John Hirst as chief executive in place of Howard Poulson, who left at the end of January after the company issued the second profit warning in just over a year.
Yesterday Malcolm Bates, chairman, told Premier's annual general meeting that the company's core catalogue distribution division had been hit by "a marked softening in the past two months in both the North American and UK markets".
The two markets account for around two-thirds of Premier's operations.
Mr Bates denied that the statement was another profit warning and said that it was "far too early" to gauge the impact of the slowdown on the company's profitability.
"It may be a temporary phenomenon or it may last longer. I simply don't know," he said.
City analysts ignored Mr Bates' comments and downgraded the profit forecast for the current financial year to around pounds 140m from pounds 150m.
Mr Bates said the fall in demand in the UK and US was probably due to the Asian turmoil which had forced Premier Farnell customers to scale back their orders.
The chairman said Mr Hirst would conduct a strategic review of the whole company to be concluded by the end of the year.
The chief executive would have "carte blanche" and could recommend a number of options including the disposal of some of the peripheral businesses.
Premier Farnell was formed in 1996 through the $2.8bn takeover of Premier Industrial of the US by the UK-based Farnell Electronics.
At the time of the deal, some large shareholders in Farnell sharply criticised the management for paying what they perceived as an inflated price for Premier Industrial.
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