Record profits at Astec

Astec (BSR) continued to benefit from booming sales of personal computers, announcing record sales of its power converters in the six months to June. Profits were also at record levels as margins widened. The shares, which have risen more than ten-fold since 1992, closed 0.5p lower at 119p.

Pre-tax profits from the Hong Kong-based, London-quoted and 49 per cent American-owned company, rose 35 per cent to pounds 9.9m at the half-way stage from sales 16 per cent higher at pounds 174.3m. Earnings per share of 2.6p were 28 per cent up and the dividend increased by 25 per cent to 5p.

Astec said its sparkling performance was because of the record number of new products introduced across the company as well as an underlying strength in the market, which received a further boost last week with the launch of Microsoft's Windows '95 operating system.

It even blamed a rising tax charge, up from 15 per cent to 19 per cent, on better-than-expected growth in Japan and Europe. Tax losses, which were still being used up in 1994, also dropped out of the equation.

The price to be paid for rapid growth included a cash outflow during the half-year of pounds 2.1m, partly attributable to rising stocks of raw materials that the company built up because of supply shortages. Despite the outflow, net cashincreased from pounds 14m to pounds 20.1m.

Sales from the Power Conversion business totalled pounds 135m, up from pounds 119m, benefiting from the company's low cost base in China. Profits were a fifth higher at pounds 7.1m. Astec also started production in the Philippines and signed up a distribution agreement with a Japanese electronics manufacturer.

Sales from Electronic Components rose 26 per cent to pounds 39.2m. Operating profits were 72 per cent better at pounds 2.3m.