Cellnet results focus on broad-based strength

Cellnet results focus on broad-based strength

ASX-listed distributor, Cellnet Group, has announced a 49 per cent jump in revenue in its first half of 2005 financial results, prompted by a rise in SMB customers and new vendor products.

Overall, the company's six-month revenue reached $306.1 million, up from $205.7 million in the first half of last year. Profits also rose by six per cent to $5.4 million.

Of this, IT product sales rose 54 per cent in the first half of this year, from $76.1 million to $117.5 million. In contrast, mobile products revenue grew by 46 per cent, from $129.3 million, to $188.5 million.

The increase in mobile product sales comes on the back of several contractual losses, including a lucrative $78 million a year contract with Hutchison 3G in June last year.

"The results proved in the last six months that we can go through changes in contracts and still have a strong business," Cellnet managing director, Stephen Harrison, said.

The results also demonstrated the success of its broad-based model, he said.

Despite a concerted effort to develop its IT portfolio, the ratio between mobile and IT sales now sits at 61.5 per cent to 38.5 per cent.

This represents one per cent more of total product revenue than recorded in the first half of 2004.

Harrison said the figures were more reflective of the success of its New Zealand telco operations, rather than a lack of strength across the IT division. For example, the distributor's IT divisions, Cassa Australia and IT Wholesale, both grew revenue by about 32 per cent over the past six months, Harrison said.

Both gained new business from the Tech Pacific and Ingram Micro merger, he said.

"We've put on Acer in New Zealand and Belkin in Australia and there will be more to follow," Harrison said. "With new vendor partners, our IT business will grow even further."

To accommodate the escalation in sales, Harrison said Cellnet was now looking to hire more than 10 new staff across its Brisbane, Sydney and Melbourne offices. It has already upgraded its facilities in both Sydney and Melbourne, as well as hired staff for both locations.

"We're looking for a broad base of people - but definitely more business development managers for our new vendor contracts," he said. "We're looking at lifting our margins. There's more we can diversify into and develop."

Harrison said it also expected to see revenues increase in the next six months across its consumer products division, launched last year.

"Revenues were a little bit disappointing," he said. "But it is a hard market to enter - it's not a walk in the park. We have also launched into the AV products side, which will give us more strength in the mass retail market."

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