Distributor Hills Limited’ looks set to end 2020 with a loss of between A$6 million to A$7 million despite having made a profit in the financial year's first half.
The Australian company had earlier warned of a business hit due to the coronavirus pandemic back in March, particularly within its health business.
Now, despite reassurance to its shareholders in February, Hills looks set to close the year ending 30 June 2020 in the red, blaming costs of A$7 million to A$8 million for the fall.
These costs included a A$4.1 million in “non-cash” foreign exchange adjustments due to a volatile Australian dollar and approximately A$3 million to A$4 million for redundancies and inventory provisions.
The results forecast comes off the back of profit growth reaching 200 per cent for the first half of FY20 and a loss of A$8.8 million in FY19.
However, the publicly listed company claimed it had improved its balance sheet position with FY20 net debt estimated to be below A$9 million - less than a third of FY19’s A$28.4 million.
Hills CEO and MD David Lenz said this, combined with its resilience against the COVID-19 pandemic, is putting the distributor in a favourable position.
“The relative resilience in our key markets and the material improvement in our balance sheet, help position the Group to navigate a continuing period of disruption and emerge in a strong competitive position,” he said.
According to Hills’ ASX statement, the cutting of its net debt comes from the divestment of its non-core businesses, which occurred through calendar year 2019 to focus on its distribution and health care businesses, and the management of investor and debtors.
These estimations are unaudited, with more details expected with the release of the distributor’s FY20 results.
To mitigate the extent of the global pandemic, Hills made the move in April to ask its staff to take pay cuts, with those on the lowest salaries seeing cuts of 10 per cent and those on the highest salaries giving up 35 per cent.