Harris Technology cuts jobs amid continuing losses

Harris Technology cuts jobs amid continuing losses

The company reported a net after-tax loss (NPAT) of $1.1 million for the six months ending December 2017

Garrison Huang - Managing Director, Anyware

Garrison Huang - Managing Director, Anyware

Harris Technology Group (ASX:HT8) has flagged redundancies, a warehouse closure and an operational consolidation in its efforts to stem costs associated with continuing losses for the company.

The publicly-listed online tech retailer and distribution player saw a 10.9 per cent year-on-year fall in revenue for the six months ending December 2017, to $22.8 million, according to its latest financials, released on 28 February.

Meanwhile, it reported a net after-tax loss (NPAT) of $1.1 million, representing a 63.2 per cent retreat from the $2.9 million operating net loss it reported for same period the year prior.

Last year, the company reported a $2.99 million net loss for the year ending June 2017, in its first preliminary, unaudited annual financial results since listing publicly under the Harris Technology name.

The company told shareholders that its H1 FY18 results reflect a decline in sales performance and margins, due to a number of factors, including “challenging retail conditions and a general slowdown in IT spending” impacting sales revenues.

The company said it also experienced a high level of competition during the period and an increase in customer rebates, including a one-off rebate payment of $213,000 made to “a major customer”, which adversely impacted margins.

However, the company told shareholders that it continued to implement a cost reduction strategy during the period, which included the closure of its South Australian warehouse and the consolidation of its South Australian operations with the group’s Victorian operations.

The company also said it reduced its headcount through redundancies during the period.

Indeed, the H1 FY18 results also reflect one-off payroll expenses of $65,000, arising from the redundancies which were incurred by the group during the period.

“The group expects to realise the benefits from its cost reduction initiatives in the longer term,” Harris told shareholders.

The latest results also reflect an increase in the group’s financing costs due to ongoing loan interest repayments, the company said.

According to Harris, the seasonality of the group’s business means the results are traditionally stronger during the second half of the financial year. The company said it has already seen an uplift in sales and orders performance in January and February this year. The company’s leadership team now expects that this positive trend will continue during the remainder of the financial year.

Regardless, the company said that, due to its H1 FY18 results performing below expectations, it is considered unlikely that the group will achieve a positive pre-tax earnings (EBITDA) result for the full financial year, as previously forecasted.

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