Renaissance has announced a half-year, before-tax profit drop of 44 percent, a fall it says was expected due partly to lower available margins.
Earlier this year Renaissance’s major vendor partner Apple launched its online store here and lowered prices for end users.
“We signalled at the beginning of the year that our results from a margin perspective would be quite a bit lower because of changes to the pricing model,” says Renaissance’s managing director Paul Johnston. “The profit before tax result was in line with what we expected it to be. We expected growth in sales but that our profit would drop.”
The distributor’s revenues were $88.1 million, up 14 percent on the previous corresponding period. Renaissance says in October it will match the interim dividend of 4.5 cents a share it paid last August.
Johnston says the company will struggle to recover from stock shortages it encountered in June and July, which resulted in the loss of over one full month’s sales for the year.
“It’s quite clear it would be difficult to make up those lost sales.”
Affected stocks included the Apple iMac, for which Johnston says there was phenomenal worldwide demand that outstripped local supply, even though he says Renaissance was very happy with the amount of the new product it was given.
Renaissance is continuing with an acquisition strategy designed to diversify its business in addition to Apple. The strategy includes recent purchases of Apple reseller Magnum Mac and private tertiary design college Natcoll.
“If you look at the direction Apple has taken on an international level and the way the business has been going…it would be a reasonable assumption that they would start dealing direct with a company that have got a presence here and in Australia.”
Johnston says Renaissance has no idea about the time frame of this direction and hasn’t received any indication about it from Apple.
“I keep saying that we’ve got an extremely good relationship with Apple. We understand that as an organisation they’re growing tremendously and when that happens their business model changes. We’ll adjust our business model to suit. We’re very comfortable with the way things are going, it’s just natural business.”
Johnston says future acquisitions could be made outside of the IT sector, as well as within it.