Transformation strategy sees CSG return to profit growth
- 21 February, 2019 10:20
CSG CEO Julie Ann Kerin
Transformation initiatives have set ASX-listed CSG on the road to 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 company chairman and executive director Mark Bayliss was pleased with the progress made in repositioning the company.
Underlying net profit was up 74 per cent to $3.3 million while earnings before interest, tax, depreciation and amortisation (EBITDA) grew 369 per cent to $7.5 million.
“Significant efforts have been made to simplify CSG, revitalise the company’s culture and strategy, and position the business for sustainable growth,” Bayliss said. “We are clearly seeing the benefits of our strategic transformation program flowing through with growth in earnings over the first half contributing to growing operating cash flow.
“CSG enters the second half of FY19 as a much stronger company, better positioned to deliver on the attractive opportunities we see.”
Specifically, CSG is undergoing a cultural change and outlined 14 key strategic initiatives in progress.
“We have put a lot of effort into revitalising the company’s culture, refreshing the board and management team, streamlining operations, investing in the business and refocusing our sales efforts,” Bayliss revealed. “Our strategic transformation program is not over yet, and we still have a lot to do in 2019.”
During the first half, CSG made some key appointments including Bayliss, Ashley Conn as CFO, hiring New Zealand country manager Chris Mackay and Craig Bowring as treasury and leasing. It is also in the process of recruiting a head of people and culture.
Furthermore, CSG managing director and CEO Julie-Ann Kerin said the quality of its revenue continued to improve particularly as momentum continues to build within its technology and display offerings. During the first half of FY19, the technology business experienced 11 per cent growth revenue to $26.1 million.
The company said its strategic partnership with Alibaba’s cloud offering, signed in October 2018, is already leading to some initial customer wins.
CSG’s print business continued to struggle, with revenue down 10 per cent to $72.7 million. This was put down to weaker print equipment sales in New Zealand, but it was offset by higher sales in Australia, supported by a refocused sales team, the company told shareholders.
“As the number one provider with sizeable market-share in New Zealand, the restructure we are progressing in this part of the business is expected to improve its sales performance,” CSG said.
CSG’s finance division, which involves its technology as-a-subscription service, saw a nine per cent drop in revenue to $12.2 million, but the company remains optimistic that the business unit will capitalise from the growth initiatives it will be rolling out.
In August, CSG has revealed its revenue for the 2018 financial year has fallen eight per cent to $225.7 million while its statutory net loss after tax reached $150.1 million, sinking further into the red in comparison to FY17 where statutory net loss was $43.7 million.
In June, CSG decided to exit the enterprise market, and created three distinct operating businesses – print, technology and finance – to simplify its go-to-market model.