Electrocomponents Creamed by Raspberry Pi

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LONDON -- Shares in Electrocomponents (ISE: ECM.L) plunged 8% to 202 pence after the distributor of the Raspberry Pi computer warned that full-year profits would be below market expectations.

The company, which operates under the banners of RS Components in the U.K. and Allied Electronics in the U.S., said first-half sales are likely to be flat as a result of challenging economic conditions.

Electrocomponents said, "Group gross margin is likely to be around 1.2% points below the prior year, affected by the increased use of customer discounts, stronger performance from lower-margin technologies, including Raspberry Pi, and adverse foreign exchange movements." It also said operating costs are expected to be 4% higher. However, it added that the additional cost will be skewed to the first half. Consequently, pre-tax profit for the first six months of the year comes to around 40 million pounds compared with 59 million pounds last time.


That said, Electrocomponents believes that second-half profits should benefit from actions to improve operating margins. Nevertheless, it reckons that given the worse-than-expected first-half performance, and assuming no change in market conditions, it still expects full-year headline pre-tax profits to be lower than market forecasts, which call for about 110 million pounds.

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The article Electrocomponents Creamed by Raspberry Pi originally appeared on Fool.com.

David does not own shares in Electrocomponents. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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