Cellnet restructure sees profits plummet
- 28 February, 2006 16:39
Cassa and IT Wholesale will disappear from the distribution lists forever next month as parent company, Cellnet, finalises a re-branding campaign. The news comes as the distribution house announced restructuring costs had resulted in an 87 per cent drop in profits for the six months to December 31.
According to its latest financial report, net profits fell from $5.68 million in the first half of the previous financial year to $717,000. Although profits had evaporated, Cellnet had recorded a 26 per cent rise in sales from $250 million to $317 million during the same six-month period.
Managing director, Adam Davenport, said the company had spent the past six months significantly discounting and writing down slow-moving and old stock to reduce working capital.
Working capital had decreased from just over $70 million at the end of June to $49 million, a drop of 30 per cent.
The distributor was now more than 80 per cent of the way through its restructure, he said. Its new branding as a single entity would take effect from April 4, supported by various promotions.
"The focus of the first six months was internal and getting costs down," Davenport said. "The next six months will be about focusing on our customers and looking outwards."
This would also include a push on improving margins via more in-depth staff training and closer supplier ties, he said. Cellnet continued to grow its market share and revenues at the expense of competitors.
"We have a much more solid platform to build on," Davenport said. "Our inventory is $10 million lighter and our stock turns have almost doubled. It's good news."
Cellnet had also completed two rounds of redundancies since embarking on a restructure, shedding 75 staff in reducing its total headcount to 375. Mercury Mobile, IT Wholesale and Cassa divisions were all now part of a centralised management structure under the Cellnet umbrella.
The company has also appointed a new supply chain manager, Geoff Sondergeld, and transferred former IT Wholesale boss, Darryl Tucker, to the newly created role of general manager of sales.
Other recent appointments include general manager of supplier relations, Steve Garden, and import business manager, Simon Woodward.
Cellnet had also put together a shortlist of 10 potential acquisitions, Davenport said.
"There hasn't been a shortage of people knocking at our door," he said. "Consolidation in the market means there are opportunities for buyers and sellers."