Updated: Cellnet upgrades profit forecast to $1.5m

Updated: Cellnet upgrades profit forecast to $1.5m

ASX-listed distributor reaps rewards from exiting IT distribution

ASX-listed distributor, Cellnet (ASX: CLT), has set its sights on delivering up to $1.5 million net profit for the year to June 30.

The distributor raised its first half-year profit expectations from $850,000 to $1m, as well as its full-year net profit forecast to $1.4m-$1.5m. The announcement comes nearly two months after Cellnet forecast first-half profits would reach $700,000 in the six months to December 31, 2009.

In a statement, Cellnet managing director, Stuart Smith, said the turnaround reflected its strong focus on core business lines, along with a more leaner, efficient organisation. Improvements in sales volumes during December, which were higher than any other previous month, were cited as the reason for the raised forecast.

Smith told ARN the increase in units shipped occurred across multiple categories. It is also in defiance of relatively modest gains in the retail segment over the Christmas season, he said.

"We have a broader range of products in these [retail and telco] areas than we had 12 months ago," Smith said. "In these categories, we're also focused on quality of product with our newer vendors, which has helped us achieve this result."

Cellnet exited the PC distribution market in December 2008 and sold its IBM operations to Avnet in June last year.

Smith pointed to its debt-free status and a $20m cash reserve, which it hopes to invest in 2010.

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