Kewill Systems warns profits hit by tough US trade

The software company Kewill Systems saw another £3.26m wiped off its market value yesterday after continued tough trading in the US forced it to issue its second profits warning of the year.

The company said it now expected to report a "material" operating loss for the six months to 30 September as a result of weak revenues, particularly from the US, and restructuring costs.

Shares in the company, which had traded as high as £31.12 at the peak of the internet boom in 2000, closed down 23 per cent, or 4.25p, yesterday at 14.5p – valuing the group at £11.1m

"Trading conditions in the IT sector remain very uncertain, particularly in the US. This has required further adjustments in the operating base of the business, to offset lower than expected sales levels," said chairman Andy Roberts.

While the company predicted an improvement in trading in the second half of the year, it said that was unlikely to be "sufficiently robust to fully offset" the first-half losses.

Trading conditions in the US had remained "particularly difficult", Kewill said, warning it might not manage to break even in the year to 31 March.

Kewill, which predicts its cash pile will be about £18m at the end of September, warned in February that it would miss its target of breaking even in the second half to the end of March of 2002 after sales in the US had been hard hit.

Analysts at Deutsche Bank said: "With this level of cash, even if the performance in the second half is not materially better, we believe the company looks to have enough cash to make it through the downturn."