Weak European demand blamed as VIP profits fall
NORTH West PC, software and components distributor VIP Computer Centre saw sales and profits fall in the year to the end of June as economic difficulties in Europe hit revenues.
The privately-owned Warrington-based company, founded by businessman Jatti Sahni, saw profits slide 32% from £2.8m to £1.9m in the year to the end of June.
Revenues in the same period fell 10% to £158.6m as European sales fell from nearly £88m to £69m.
In his review of trading Mr Sahni said: “The global economic climate has had a significant impact on results , particularly in mainland Europe, where sales fell by 21% and profit after tax by 56%. This was influenced by the combination of adverse Euro movements against the US Dollar, in which most products are purchased, and over-capacity in all markets reducing both demand and placing increased pressure on margins.”
He said profits has also been affected by investment in new start-up businesses in Dubai and the US.
Last month VIP acquired Liverpool-based PC assembly specialist CMS Computers, and this deal – which will add around £30m to turnover – along with a general improvement in trading in the new financial year, gives reason for optimism.
“Post year-end the company has experienced improving demand and looks forward to increases in both revenue and profit in 2011-12. Future performance will also benefit from positive results by the two new companies.”
VIP, which has around 160 staff, did not pay a dividend to shareholders during the year. In 2009-10 £600,000 was paid out.
