Pace tumbles after warning on its profits

Marion Dakers
SHARES in TV tech firm Pace crashed 39 per cent yesterday after an unscheduled trading statement warned that profits for the year would be worse than forecast.

The profit warning wiped nearly £300m from Pace’s market value and led to speculation that the firm is vulnerable to a takeover approach or management shake-up (see Analyst Views, below).

Pace, which makes digital set-top boxes, said supply chain costs have risen during the year, exacerbated by the Japanese earthquake and tsunami in March.

Its European business has been profiting less than expected despite hitting its revenue targets.

Pace said it will close its network business, which provides digital TV for those outside the normal broadcast range, due to “insufficient demand”.

The Pace board has guided on an operating profit of between £97m and £110m – below consensus estimates of £114m.

The company previously lost 20 per cent of its market value in March after it announced that a customer had delayed a major US contract.

Pace said it now expects operating margins of 5.5 per cent, but is confident of a return to its target of eight per cent by the end of the year. Chief executive Neil Gaydon said the warning was “disappointing”, but added that the firm has already taken action.