Cost and inventory control buoy Legend result

Cost and inventory control buoy Legend result

ASX-listed memory and components manufacturer reduces debt by 29 per cent to $28.9m in the year to June 30

ASX-listed memory manufacturer, Legend Corporation, has reported net profits of $4.6 million for the year to June 30.

The result was off total revenue of $90.4 million, a drop of 34 per cent year-on-year, or a 13 per cent decline off continuing operations.

Eighteen months ago, Legend announced it would cut back its memory manufacturing and computer commodity business due to flagging revenue.

The SA-based company also reduced total debt by 29 per cent during the year, bringing the balance to $28.9 million.

In a statement, Legend CEO, Bradley Dowe, said expense management, prudent foreign exchange policies and a focus on quality of sales allowed it to lower debts.

According to its financial report, operating expenses and inventory levels were both reduced by 10 per cent.

Dowe was pleased with Legend’s results given the challenging economic conditions and unstable Australian dollar.

“In ICT, we’ve had our own downturn over two years ago, yet we have managed to deliver a strong result and year-on-year growth,” Dowe said. “It doesn’t matter how attached you are to the business you first started out with, you have to change according to the customer environment. So many long-term players have disappeared because they weren’t able to adapt.”

Dowe highlighted Optima, Commander and TodayTech as examples of former Legend customers who hadn’t adjusted successfully.

Gross margins across Legend’s four divisions – Cabac, Hendon, Legend Performance and Cabac Power – were up by 1.7 per cent to 38.7 per cent year-on-year. However, the company admitted its Cabac electrical wholesale division continued to perform under expectations and blamed the housing and commercial building downturn for the result.

However, Dowe said its traditional Legend memory business was expanding into ancillary and computer room products such as UPS, racks and passive cooling equipment, to take advantage of opportunities in the server and datacentre markets.

“While we can’t say the whitebox market is showing a lot of growth, certainly the number of servers per person is a growth area and we’re looking to service that with a range of new products,” he said. “I see this as a great opportunity for our channel partners.”

The focus next year remained on reducing costs and improving inventory control, Dowe said.

This would ensure Legend was positioned to take advantage of the economic upturn – once it arrives, he said.

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