Divesting business units sees Hills profit grow
- 25 February, 2020 09:22
Since divesting certain business units, publicly-listed health and tech distributor Hills has experienced solid profit growth of more than 200 per cent from $242,000 to $2.6 million for the first half of the financial year 2020, ending December 31.
Earnings before tax was up 79 per cent to $9.1 million, but revenues tumbled 4.2 per cent to $126.7 million following the company’s decision to divest its antenna business to Bitek (down $3.5 million in sales) and AV business unit to Amber Tech (down $2 million).
The distributor made a strategic decision to focus on its Health business that includes nurse call solutions, patient engagement solutions and WiFi networks for hospitals and aged care facilities across A/NZ.
So far, it’s nurse call business has signed six contracts for its new IP7500 platform during the first half and will continue to complete the delivery of a number key projects in the second half. The new IP series wireless platform remains on track to launch in April, the distributor said.
The first installation of the GetWellNetwork patient engagement platform also took place in the first half, with the new system operating in 400 beds at the Calvary Hospital in Adelaide.
Hills also took measures to streamline its Distribution business which focuses on integrated security, IT and technical services.
Hills told shareholders it worked hard to return the unit to profitability following the divestment of non-performing businesses.
In a statement to shareholders, the company said both businesses were expected to continue their positive momentum in the second half of the year.
“After a year of significant change in 2019, we are starting to see the results of our decision to focus on our Health division and streamlined Distribution division,” Hills CEO and managing director, David Lenz, said.
“With distribution returning to profitability, a growing pipeline of orders in health, strong operating cash flow and a continued commitment to finding operational cost savings, we remain on track for a solid full year result.
“As we continue to prioritise growth opportunities, we are confident of delivering a prolonged period of sustainable growth in shareholder returns,” Lenz added.
The distributor has also sounded that it will continue to monitor the impact of COVID-19 on its supply chain, and said that even though it has a strong inventory position, there may be some delays from products sourced from China, and it expects a minimal impact to its Health business due to low exposure to goods sourced from China.