Ducommun Inc. and Micro D Inc., two major distributors of electronics products, reported sharply higher second-quarter profits Wednesday in response to improving industry conditions and internal restructuring programs.
Ducommun, which moved its headquarters to Cypress last year from Los Angeles, reported earnings of $785,000 for the second quarter, more than seven times the $103,000 recorded a year earlier. Second-quarter revenue, affected by sale earlier this year of two subsidiaries, fell 4% to $116 million from $120.5 million in 1986.
At the same time, Santa Ana-based Micro D, the nation's leading supplier of personal computer products, accessories and software, reported quarterly profits of $1.1 million, up 62% from $703,000 in 1986. Micro D's second-quarter sales also increased 62%--to $76.8 million from $47.3 million a year earlier.
Bill Groves, vice president of InStat Inc., a semiconductor market research firm in Scottsdale, Ariz., said the second-quarter results of both companies reflect growing sales of a broad range of electronic components.
"Distributors are doing well because they handle about 40% of the electronic components used in the country," Groves said. "As the industry goes up, they're bound to go up as well. All of those industry segments have been up for the first half of this year."
Linda White, a computer industry analyst for Future Computing Inc. in Dallas, said Micro D in particular is benefiting from increasing sales of personal-computer products, the market in which it specializes.
"Micro D is a good example of a successful turnaround," White said. "They were having difficulties in '85, but they were able to institute programs that brought the company back to profitability."
For the first six months of the year, Ducommun reported net income of $7.2 million, compared with $324,000 during the same period in 1986. The company's first-half earnings include $8.9 million in one-time gains during the first quarter from the sale of two subsidiaries, Metermaster and Airdrome Parts Co.
Ducommun's six-month sales were $225 million, down 5% from $236.7 million a year ago. The company said that the declines in both first-half and second-quarter revenue reflect the sale of the two subsidiaries and that revenue from continuing operations increased in both periods.
The nation's fourth-largest distributor of electronics products, Ducommun is trying to recover from a two-year industry slump, the loss of key distribution franchises and the negative impact of the Challenger space shuttle disaster on its aerospace operations.
In late 1986, Ducommun began a major restructuring program involving upper-level management changes, elimination of marginal product lines and subsidiary sales. The company said its reorganization efforts continued through the second quarter.
Ducommun Vice President Mark Jorgensen said that "we've turned the corner and are starting to head in the right direction. We're encouraged, but we remain cautious."
At Micro D, first-half net income of $2.6 million was more than double the $1.1 million of a year ago. Six-month sales were $158.6 million in 1987, up 77% from the previous year's $89.4 million.
Micro D Chairman Chip Lacy said the company's strong performance reflects a restructuring program initiated in 1985 as well as a growing recovery of the computer industry. Micro D has reported six consecutive profitable quarters following a string of five consecutive quarterly losses.
"We've benefited both from a growing microcomputer market and a growing share of that market," Lacy said. "Obviously, we wouldn't have experienced this rate of growth if the overall market was not increasing nicely."