StockMarketWire.com - Northamber reports that turnover in the first quarter was marginally lower than for the final quarter of the previous financial year, a reflection of the contraction in its sector, the summer months and the Olympics.

With contraction in volumes, ability to earn retrospective volume rebates was significantly affected and reduced overall margins. This resulted in first quarter margins almost one percentage point lower when compared with the prior year as a whole.

Whilst the previous actions to reduce overheads have proved correct, the full benefit has not been seen in the first quarter as a result of the decline of revenues, although losses for the quarter are approximately half that of the comparable period last year.

Despite the pressure from all sides on the operations, including some tightening of trade vendor credit terms and the inevitable drift of debtor days, the company still maintains a very healthy balance sheet with a current assets ratio of nearly 3. The debt free cash balance at the end of September was £1.3 million.

In summary, the market contractions in the electronics sector still show no sign of abating and require a very high degree of reactive focus, with the Comet failure and Argos contractions recent examples.

There are also further indications of the need for driven consolidation as all parts of the channel seek economies. When a market contracts, one of the costs that suppliers tend to consider first is their cost of distribution, and to reduce that.

As a company with proven expertise in the logistics of distribution and the resources able to handle a significant increase in the type of products distributed, the board believes the company is in a good position to benefit from any future consolidation in the industry.


At 9:44am: [LON:NAR] Northamber share price was -4p at 32.5p



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