Unidare's six-month pre-tax profit to March 30th will fall to #1.5 million (£1.2 million) from #5 million last year, it warned yesterday.

The distribution group attributed the 70 per cent slump to a "sudden and sharp" downturn last November in the US market, which continued in December.

Its share closed at #2 on the Dublin exchange yesterday, 20 cents weaker than a day earlier.

When asked whether the drop would continue into the second half of its financial year, Unidare chief executive Mr Paul Duggan said that would depend on the performance of its US businesses. Unidare was unlikely, however, to match last year's pre-tax profit of #10.87 million.

He said it was "extremely difficult" to make predictions about economic conditions in the US. "Is what we're seeing a sharp correction or something more fundamental?" he asked.

At the group's a.g.m., chairman Mr Jack Hayes also attributed declining profits to relocation expenses at its British business, Eland Electrical, which were greater than expected. Mr Duggan said these costs were once-off.

Of the group's entire business, he said: "The view that we're taking is that we have to be extremely prudent and careful with expenses."

Accordingly, Unidare will cut back on capital and working capital expenditure.

In addition, the group and its advisers had commenced a "fundamental re-analysis" of its strategic options. Asked whether it wanted to sell any parts of its business, Mr Duggan said that was not planned.

Mr Hayes said: "The purchasing managers' index and the domestic steel consumption index [in the US] declined sharply. The resulting uncertainty has led many customers to reduce or delay their purchasing."

Demand at Unidare's welding business, Nasco, fell.

The group claimed its oilfield supplies and maintenance business, Oklahoma Rig & Supply Co (ORS), continued to grow, but at a lower rate.