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Hills NZ struggles as COVID-19 slashes sales

Hills NZ struggles as COVID-19 slashes sales

CEO says ASX-listed distributor is not expecting its NZ business to recover until the second half of 2021

David Lenz (CEO and managing director, Hills)

David Lenz (CEO and managing director, Hills)

Credit: Hills

Distributor Hills NZ reported lower sales and a much increased loss after a promising start to its 2020 financial year.

Revenues fell from $20 million in 2019 to $15.3 million in the year to 30 June, 2020, while a 2019 net loss of $676,000 increased to $2.3 million.

Parent Hills Australia declined to comment on the New Zealand result, pointing Reseller News to comments made at the Australian Securities Exchange (ASX)-listed company's annual general meeting last month.

After a good start to the 2020 financial year, everything changed when COVID-19 arrived. Trading conditions after March 2020 were described as "extremely difficult".

An A$2.6 million after tax group profit for the first half of the year was paired with an $8.8 million loss in the second half, driven mainly by one-offs but with an underlying trading loss of $2 million.

That underlying loss was attributed to a dramatic decline in revenue and "margin compression" caused by the pandemic and lockdowns.

"In New Zealand, our business went into stage three lockdown on the 28th of April and in May," CEO and managing director David Lenz told shareholders.

"Even operating as an essential service, we saw a 90 per cent reduction in sales over the prior year."

Even Hills' health business suffered, despite being an essential service, as sites were closed and projects and elective surgery were deferred.

Management, staff and the board all took pay cuts, the company said, and government assistance was claimed. 

Work and Income NZ's wage subsidy search service showed Hills NZ claimed $174,280 during the first wage subsidy and a further $131.219 during the second.

Despite that, restructuring saw 39 people leave the A/NZ business.

Lenz said Hills was not expecting its NZ business to recover until the second half of its 2021 financial year.

Hills operates two business units. 

Health delivers nurse call and patient engagement systems as well as wi-fi networks to hospitals and aged care facilities. Distribution delivers integrated security, IT and technical services.

In November, Reseller News reported Hills had lost its distribution business with cyber security company Genetec after the vendor opted to go direct with partners and systems integrators in A/NZ.


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