Electrocomponents issues profits alert

Electrocomponents became the latest company to dampen expectations of any significant upturn in trading conditions yesterday as the electrical and industrial parts maker warned profits would come in below City forecasts.

Shares in the company fell 7 per cent after it said it anticipated profits of about £45m for the six months to the end of September, against analysts' predictions of £48m. The finance director, Jeff Hewitt, also foresaw full-year profits falling from a consensus range of £105-106m to about £103m.

The company said that like-for-like sales were broadly in line with a year ago but marketing and selling costs - principally a bigger sales team - had increased by £3m, and costs and depreciation associated with the implementation of a pan-European IT system had also increased expenditure by a similar figure. Mr Hewitt said that both were signs of a commitment to a long-term view. Mr Hewitt also said encouragement could be derived from recent purchasing managers indices although improvements tended to lag the indices by three to six months.

Earlier this month its rival Premier Farnell also said there was no clear evidence of an improvement after an "unprecedented downturn in the electronics industry".Shares in Electrocomponents fell 25.75p to 322p.