Thailand floods cost hard disk manufacturer £5.9 million

18 November 2011

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18 November 2011 | Adam Leach

Hard disk manufacturer Pace said it expects profits to be hit to the tune of $9.5 million (£5.9 million) after severe flooding in Thailand caused supply chain disruptions.

Updating investors yesterday, the company, which provides technology products and components to Sky, Virgin Media and Canal +, forecast profit of $141 million (£89 million) for the full year after the supply chain disruptions in its hard disk drive line (HDD).

The company said it expects the issues to continue to impact on performance throughout next year. It reported that suppliers for the HDD line have been unable to forecast pricing or capacity. As a result Pace is looking for alternative suppliers while keeping customers updated on any potential issues. Overall, it predicts the impact on 2012 performance will be $35-$50 million (£22-£32 million), however, the company expects to be able to meet its financial obligations. The statement said: “We will remain within our banking covenants.”

CEO Neil Gaydon, said: “In common with the broader consumer electronics industry, the immediate impact to our business of the Thailand flooding is significant, requiring diligent management. Looking beyond this short term supply chain issue, the strategic review gives us a clear roadmap to increased operating profit and enhanced quality of earnings.”

Earlier this month, a report by the Business Continuity Institute (BCI) highlighted the need for companies to pay more attention to second tier suppliers as 40 per cent of disruptions happen below the direct supplier level.

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