Australia-headquartered distributor Hills is to cease operations of its New Zealand security distribution business due to unprofitability.
The Australian Securities Exchange (ASX)-listed company said the security business had been loss-making and required a "multi-year turnaround" to shift the balance into the black.
Hills said its strategy will now focus on cash generation and areas of long-term growth potential.
Although its security business will close, Hills will still remain active in New Zealand through its technical services division, which provides installation services for Sky TV, and its health solutions business.
“After a comprehensive review of our New Zealand operations it was clear that our growth plans were not being achieved and the fundamentals of the business required a substantial multi-year turnaround to become profitable," Hills CEO David Clarke told shareholders.
"In our view the significant time and resources required for a turnaround in New Zealand are better invested in our fast-growing health solutions division, expanding Hills technical services operations and improving the performance of the Australian security and IT distribution business."
“I acknowledge this is a difficult time for our hard working and committed New Zealand staff," he added. "The company will be supporting them closely throughout this process.”
Hills flagged it was reviewing the security distribution business in New Zealand last month, commencing a workplace change process with employees to consider options for the business.
As reported late last year, Hills NZ reported lower sales and a much-increased loss after what had been a promising start to its 2020 financial year.
Revenues fell from NZ$20 million in 2019 to NZ$15.3 million in the year to 30 June 2020, while a 2019 net loss of NZ$676,000 increased to NZ$2.3 million.
In May this year, Hills suggested it hoped to get its technology distribution business back on track under the leadership of its new CEO, David Clarke, former CEO of publicly listed health software provider Corum Group.
Former CEO David Lenz announced in February that he would retire from his role after almost five years in the top job as CEO and managing director for the publicly listed distributor and health technology provider.