Australia-based, trans-Tasman distributor Cellnet reported a 64 percent increase in net profit to A$1.52 million for the first six months to December 31, halfway through its fiscal year.
The mobile accessories, flash cards and telecommunications distributor attributes the result to an expanded customer base, product offering and an efficiently operating business.
The result fell within the upper range of a forecast posted to the Australian Stock Exchange (ASX) by the company, which predicted group net profit would reach between $1.35 million and $1.55 million for the half-year ending December 31.
The company did not release information specific to the New Zealand market, but according to a spokesman, its performance tracked that of Cellnet at large, citing efficiency, good product support and more activity in the consumer space.
“We centralised a lot of our back office functions a couple of years ago,” says New Zealand country manager Dave Clark. “So in New Zealand we’re really an operation that has focused on sales and logistics and fulfillment now.”
“A lot of our product management is based out of Australia either in Melbourne or Brisbane,” he says. “But we do have localised product management out of Auckland for brands that are unique to New Zealand, which do not have trans-Tasmanian synergies.”
Among these is its exclusive dealer relationship with Navman — the GPS products vendor, which has its busiest time of year in December — and brands in the mobile space like iLuv and Speck. The company also sees growth in its USB Flash memory cards and “high performance” cards for digital still cameras.
“So in terms of overall mix, one of our strengths in the last period of time has been diversification,” Clark says. “While one of our strengths is traditionally in the telco sector, today we do a lot more consumer products. Our product portfolio has diversified from being solely based around mobile phones and telecommunications, to having a broad range of products in the consumer space.”
Australian Reseller News reports that despite the company’s results, Cellnet’s termination of a distribution agreement with Sandisk is expected to put a $2 million dent in revenue for the remainder of the financial year, but net profit impact is expected to be immaterial.
In a statement to the ASX, Cellnet said there was still room to expand its operations through the use of existing infrastructure.
The share buy back programme resulted in more than 3.6 million shares repurchased at an average price of 32 cents per share, totalling $1.17 million.
It highlighted there were still some challenges to be met in full capacity utilisation and effectively utilising cash resources available.
Cellnet’s balance sheet has remained debt free with $19 million available in cash resources.
The distributor remains optimistic that the company can improve its earnings during the second-half of the 2011 financial year.