After suffering a $68.3 million statutory loss during the financial year ending 2017, Hills is hoping to return to profitability by next year.
“Hills Limited expected to deliver a full year statutory loss of between $6–$8 million for FY17, compared to a statutory loss of $68.3 million in FY16,” Hills CEO, David Lenz, told shareholders on 22 June.
"Given our investments, the reduction in operating expenses, strong customer and vendor relationships and increased profitability in the Hills Health business, we expect to return to profitability in FY18," he said.
According to Lenz, the company’s operating cash flow is currently targeted to be neutral for the second half of the 2017 financial year, inclusive of restructuring costs and charges associated with the proposed Lincor transaction, which were paid in the second half of the year.
The technology distributor, which counts Samsung, Hitachi and Brocade among its vendor partner network, proposed a merger of its Hills Health Services (HHS) division and US-based Lincor earlier in the year, which was subsequently terminated.
Regardless, Lenz said that the profitability of the Hills Health business had materially increased year-on-year, due in part to the turnaround of the Nurse Call business and further major contract wins.
The company also told shareholders that, during the second half of the 2017 financial year, its margin quality remained strong, but revenue in the Hills Building Technologies businesses declined. This impacted profitability, in part due to changes in its vendor portfolios and a decision to exit National Broadband Network (NBN) satellite installations.
In response, Hills said it has further reduced operating expenses and, along with the changes made earlier in FY17, expects to deliver an annualised reduction of about $12 million in 2018.
“This has been achieved through continuing to flatten the organisation and ensuring minimal impact on front-end customer service,” the company said.
The company also announced it has commenced the development of a new digital platform. Representing “major” investment for the company, the platform is expected to come online in the 2018 third quarter, for Australian and New Zealand markets.
It is expected to deliver increased sales and a number of features to Hills customers, with 24x7 e-commerce availability and access to all account information including statements, invoices and price books.
It will also have the ability to update details and make payments online and deliver product information, providing access to technical specifications.