Westcon Group's NZ sales fall 11.6 per cent in 2021

Westcon Group's NZ sales fall 11.6 per cent in 2021

Cost reductions keep Westcon Group's New Zealand profits stable.

Westcon Group NZ's Auckland headquarters.

Westcon Group NZ's Auckland headquarters.

Credit: Google

Sales at major distributor Westcon Group's New Zealand business fell from $152 million to $134.4 million, or 11.6 per cent, in the year to 28 February 2021.

Profits were much steadier at $3.7 million before tax compared with $3.8 million in 2020 as purchasing costs fell from $133.6 million to $120.1 million and employee expenses declined from $12.4 million to $10 million.

Net cash flows from operating activities increased substantially, from $860,986 to $11.7 million during the period and cash at the bank or on-hand increased from $20.4 million to $31.6 million.

Inventories at balance date declined from $7 million to $3.3 million.

Local management was unable to comment on the results as the company's majority owner, Datatech, is publicly listed in South Africa.

The results reported by Reseller News last year have also been restated, mostly due to the misclassification of vendor rebates as revenue. That and other accounting changes lowered Westcon's reported revenue in 2020 by $69.5 million.

Majority owner Datatech reported Westcon International's revenue lifted by 4.6 per cent during the year, from US$2.5 billion to US$2.6 billion.

Westcon International's business was good overall, the company told shareholders in May, except for COVID-19 supply delays and disruptions "especially in countries with highly restrictive lockdowns".

How that may have played out in New Zealand is unclear apart from anecdotal evidence that securing adequate and consistent supplies has been challenging.

"The multi-year investments in Westcon International's advanced systems and business automation enabled business continuity plans to be deployed effectively with almost the entire workforce switching to remote working," the parent company reported.

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