Clothesline manufacturer turned technology distributor, Hills (ASX:HIL), has registered a four per cent drop in revenue for the first half of the financial year.
Despite the dip in revenue, earnings were up $3 million dollars from last year to $8.4 million, with the company reducing its debt from $24.2 million in June 30 to $20.9 at the end of 2016.
The company best known for the iconic Hills hoist clothesline sold its Home Living division which included the intellectual property rights to the clothesline to AMES Australasia, a subsidiary of New York-based Griffon Corporation.
The sale in early January marked a big step in the company’s push to become a fully fledged technology distributor, the company’s share market value is approximately $100 million.
This is also the first reporting period for the company since David Lenz took over as CEO in August 2016.
“Hills will start to move beyond the recent stabilisation phase and ,focus on profitable growth opportunities in the remainder of FY17 and beyond,” Lenz said in a statement to the ASX.
The company attributed the drop in revenue to competition from Chinese brands affecting low-end closed circuit television (CCTV) cameras, reductions in Antenna sales, and the loss of income following the sale of certain assets.
Significantly, the company also said revenue was impacted by higher costs to service its Ericsson contract. The company said it is working with the vendor to “address delivery related issues and to bring costs back into line.”
Hills said it has also taken other steps to improve results including the signing of a contract with UTC Fire & Security to help it compete in the low-end CCTV market, and return the Antenna business to prior sales levels.
The company also said it has continued to focus on its cost structure by addressing its corporate structure and reducing overhead costs.
Hills proposed a merger of its Hills Health Services (HHS) division and US-based Lincor earlier in the year which was terminated, but despite this the company said HHS had a strong first half of the year which exceeded expectations.
“I believe the Health category is the right fit for the Hills Group and Presents the company with the opportunity for greater leverage across the HBT products and services portfolio,” Lenz said.
Hills share price was $0.32 at the time of writing.