CSG realises $7.7M in cost savings

CSG realises $7.7M in cost savings

Also makes $10M in inventory reductions

CSG 2021 strategic transformation program is expected to result in $7.7 million cost savings in 2019 financial year.

Since implementing the strategy a number of staff reductions were made as a result of exiting the enterprise business and other operating "improvements" which will result in the $7.7 million cost savings. In June last year, CSG detailed its intentions to move out of the enterprise market and simplify its go-to-market model in three distinct areas - print, technology and finance.

The public-listed company is continuing to make adjustments to its executive line up following the departure of its chief business transformation officer, Tony Grooby and general marketing manager Vanessa Harford.

Both Grooby and Harford exited CSG in May, with the company currently searching for suitable replacements.

"Part of any transformation is getting the right people in the right roles so that you can execute on company plans," a CSG spokesperson said.

In the meantime, Steve Rowe was brought on as the chief people officer, bringing more than 25 years of HR experience to the table.

In a statement, CSG said these key appointments will continue the transformation of the senior executive team. 

In addition to the cost savings, CSG said it was also on track to deliver $10 million in inventory reductions and has achieved this through procurement efficiencies, "right sizing" inventory holding levels, warehouse operating efficiencies and use of third party logistics services.

During a detailed review of its finance strategy, CSG identified $2.6 million of bad debts, due to three customers going into liquidation. It is also in the stages of rolling out a new Salesforce CRM and financial platform 'Customer Hub.'

“Significant efforts have been made to revitalise the company’s culture and strategy, strengthen its financial position and deliver sustainable growth,” CSG acting CEO and managing director Mark Bayliss said. “The team has worked hard over the last three months with a significant amount of change to enable the company to deliver its underlying FY19 EBITDA result and be positioned for sustainable growth in FY20.”

Excluding the bad debts, CSG is aiming to achieve the lower end of its previous underlying FY19 EBITDA guidance range of $17 million to $20 million.

Earlier this year, Julie-Ann Kerin stepped down from the role of CEO and managing director after serving seven years at the company. 

Bayliss stepped in as her interim replacement, stating that it still had a lot to do in its business transformation program for 2019.

CSG has seen net profit growth of 140 per cent to $1.2 million for the first half of 2019 financial year, ending 31 December.

Revenue was still in the red six per cent to $109.9 million, but Bayliss was pleased with the progress made in repositioning the company.

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