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Warning hits Crystalate

ELECTRONICS group Crystalate yesterday warned that within the past two months there had been a marked deterioration in trading conditions in some of its subsidiaries. Market reaction was to swiftly mark the shares down 13p to 92p to capitalise the group at #29m.

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The profits indication is just one from the increasing number of companies warning of adverse conditions including giants such as Courtaulds. Last Friday alone, there were at least five and the flow must be expected to accelerate as higher interest rates lead to de-stocking by UK customers and the strength sterling chokes off exports and encourages imports.

Crystalate is chaired by Lord Jenkin of Roding, a former Environment Minister. In the last couple of years, there have been major management changes.

The company's problem areas have been in the US resistor activities, the Bresson telephone voice box operations and in micro-circuits. And the important Welwyn electronic systems subsidiary is now suffering from customers rescheduling orders.

At the interim stage to March, pre-tax profits recovered from #1.68m to #2.29m with general expectations being for a full-year outcome around the #5.7m seen in 1987-88. Shareholders have seen no net increase in profits since 1984 with earnings gently declining. Inevitably, there will be a heightening of speculative interest in the stock on takeover hopes which may be sufficient to overcome the poor medium-term trading prospects.

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