Shares in Medion AG, the German-based consumer electronics and PC maker, fell 22 per cent today, after the company issued a profit warning to the Frankfurt stock exchange.

The company which sells through large retailers across Europe, says that profits for fiscal 2005 will be “significantly lower” than anticipated by analysts. It now expects to report EBIT (earnings before interest and tax) of €19m on sales of €2.5bn for 2005. The market had expected EBIT earnings of €50m.

It blames the shortfall on “the difficult consumer and market environment”. A sales management restructure and withdrawal from some product segments also contributed to the decline.

Medion has "struggled to contain ballooning costs as prices for consumer electronics such as flat-screen televisions and person computers have dropped", Bloomberg reports.

For 2006, the company forecasts lower sales, due to dropping unprofitable product lines and also because of the “persistently difficult economic situation in Germany and key international markets”. ®

Related link

Press release.