LONDON (ShareCast) - Technology firm Acal gave investors confidence after it posted slightly higher first half profits despite weak market conditions.

Revenue for the first six months fell 1.8% to £77.6m, though pre-tax profit before exceptionals increased to £2.6m from £2.4m in the same period last year, which reflected some improvement in gross margins and tight control over operating costs.

Although the group does not see much in the way of any further gross margin improvement, it does see room for more cost savings.

The group said industry statistics from the UK and Continental Europe indicate that the market for electronic components has weakened during the first half of the current financial year, particularly in the lower technology passive and electromechanical arena.

“We expect the weak market conditions being experienced, both in the Electronics and Parts Services divisions, to continue until at least the year end,” said the group.

“Consequently, at present we do not expect any year-on-year growth in the business in the second half year,” it added.

The group said its strategy is mainly based on organic growth but it is considering selective acquisition opportunities in its core business.

Interim dividend was maintained at 7.2p.

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