Electronic component distributor Abacus has it warned that the US and European slowdown is now hitting trading after a 56 per interim profits increase to £10.5 million. James Crux reports.

A serious downturn in the US electronics industry is expected to hinder fortunes at fully listed Abacus (ABU) as European markets slow down in reponse. 'We're early into the downturn' explains chief executive Martin Kent, who admits that trading volumes have been down since early spring. Abacus has a 54 per cent sales exposure to the troubled semiconductor market, which has hit sales at its recently acquired Silicon Concepts arm.

Customers of this subsidiary include semiconductor users such as Motorola, Lucent and Nortel. 'We're a cyclical business' concedes Kent.

Despite the cautious outlook statement, Abacus posted a potent performance for the six months to March. Profits rose 56 per cent to £10.5 million on sales up 54 per cent to £108.3 million.

Organic growth was strong. Sales excluding acquisitions advanced 19 per cent and continuing profits gained 46 per cent.

New franchise wins included Texas Instruments in partnership with Rutronik in Germany. Meanwhile, Abacus' Micromark subsidiary is launching with Philips Semiconductors in the UK.

Abacus made three acquisitions, including Silicon Concepts, during the period, together contributing £24.3 million of sales and profits of £1million to the figures. The company's Trident subsidiary, which manufactures and distributes electronic displays, and C&CD, its distributor of electromechanical components, 'performed to expectations'.

Analysts have downgraded profit forecasts from £21.9 million to £18 million for the full year. And investors ran for cover on the group's cautious outlook statement sending the share price down by 42.5p to 267.5p.

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