The increasing popularity of laptops helped deflate margins at DSG international's computing operation, the firm revealed in its full year results today.

The electronics group turned in full year revenues of £7.9bn for the year to 28 April, up 14 per cent on the year. Pre-tax profits were £114.1m, down on the previous year's £295.9m. The profit figure was dented by a series of costs, particularly a write down on its Unieuro operation in Italy and the costs of overhauling its PC City operation in France.

The UK computing operation - ie PC World - turned over £1.9bn, up six per cent on the year, and turned in underlying profits of £124.8m, down slightly on the previous year's £129.4m. International computing turned over £347m, up 22 per cent. However, it turned in a loss of £28.2m, up on the previous year's £22.2m shortfall.

The computing operation had to swallow the costs of the PC City overhaul, and the launch of DSG's TechGuys service operation in the UK.

More generally, DSG highlighted "high levels of deflation in core hardware products". Or, put another way, kit gets cheaper, and you have to shift more of it. Laptops, once essential in boosting PC margins, are now a drag. You can only sell so much in the way of add-ons for a sealed box.

DSG said it hopes to reduce costs across its computing operations by bringing all its UK PC operations under a single unit, DSGi Business. ®

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