Hills warns of business hit amid COVID-19

Hills warns of business hit amid COVID-19

Anticipates falling customer demand and project delays

Credit: Hills

Hills Limited has announced expenditure cuts and refocus on cash flow as the COVID-19 coronavirus pandemic hits its health business.

Despite earlier reassurance to shareholders, the health and tech distributor has decided to withdraw its earnings guidance due to unpredictable nature of the COVID-19 spread in Australia and globally.

Publicly listed Hills now intends to reduce its operating expenses and monitor cash flows to manage any declines in customer demand for its products and services. 

In a statement to the Australian Securities Exchange (ASX), the company said customers of its Hills Health Solutions business are now shifting focus onto mitigating COVID-19 themselves.

As a result of this, the distributor is anticipating a spike in project and order delays during the second half of FY20.

The latest update marks a shift from its shareholder reassurance in February, whereby it said the COVID-19 would have a minimal impact on its health business as few of its goods are sourced from China.

The effect on its distribution business is not as clear cut, as Hills claims to hold a strong level of inventory for its small-to medium-sized business and IT business segments that would balance out project delays. Its technical services is also still seeing business continuity associated with the NBN.

In addition, the company claimed its patient engagement business is still likely to generate revenue.

Hills CEO David Lenz said the business was working closely with customers and suppliers to mitigate the financial impact of the pandemic.

“We are taking all measures necessary to ensure the safety and wellbeing of our employees and their families,” he added. 

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