Updated: IBM NZ slashes staff costs in 2017, increases sales and profit

Updated: IBM NZ slashes staff costs in 2017, increases sales and profit

Big Blue stabilises after losing $35 million in sales in 2016 and boosts its bottom line

IBM NZ reports improved performance in 2017.

IBM NZ reports improved performance in 2017.

IBM's local business reported slight improvements in both sales and profits for the year ended 31 December 2017 as well as a deep cut in employee costs.

The tech giant made $297.4 million in sales, up $2.3 million over 2016 when sales fell by $35 million year on year, while net profit after tax was $26.7 million, an increase of $2.6 million.

During the year, IBM slashed its employee benefits costs by $20.4 million, from $89.2 million in 2016 to $68.8 million. However, termination benefits appear to have mostly been paid out in 2016, $6.3 million compared with $1.3 million in 2017.

Gross profit lifted substantially, by $20.6 million to $65.4 million as the cost of sales, service and financing fell by $18.3 million.

After a $28 million decline in 2016, services income fell again, from $200.9 million to $187 million. However, sales of goods lifted from $90.3 million to $108.4 million. Financing revenue fell from $3.8 million to $2 million.

An spokesperson said the local company has continued to invest in artificial intelligence, cloud, blockchain and security, driving competitive differentiation and building the foundation for sustainable and profitable growth. 

"These investments provide clients with access to innovative technologies and expertise to advance their digital agenda, with our ongoing commitment and contribution to New Zealand also recognised at the recent NZ Hi Tech Awards," IBM stated.

One-off income fell significantly during the year from $17 million to $520,000 year on year due in large part to sale of IBM Global Financing NZ in 2016 contributing a one-off gain of $19.7 million.

The sale of Algo Financial Manager and IBM Clarity delivered a one-off gain of just $18,000 to IBM's books in 2017.

Meanwhile, tax paid in New Zealand was up $6 million to $10.4 million year on year.

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Tags New ZealandAccountssalesnzfinancial report2017



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