Hills Ltd (HIL) says it will post a loss in the for the first quarter of the 2015-16 financial year before the benefits of its restructure begin to be realised.
The company is best known for its Hills Hoist clotheslines, but spent three years rebuilding itself to be a distributor of technology and communications systems under the former CEO, Ted Pretty, which led to a loss of $86 million for the year to June 30.
The update came well after trading ended at 4 pm and saw Hills shares bounce 8% to 46.5 cents.
HIL 1Y – Hills transitioning from clotheslines to communications
Hills Chief Executive Officer, Mr Grant Logan, said in the statement to the ASX: “We are rebuilding and that takes time to do it well. However, we consider that Hills now has the right people, products and solutions in place and that the business will continue to build and grow.”
“Our current attention is focused primarily on stabilising operational performance and improving our customers’ experience across all areas of the business. Significant relationship gains with customers and suppliers have been achieved. We have also added new distribution arrangements to enhance our portfolio of products, and are building a healthy sales pipeline, and continue to win business and major contracts,” he said.
In line with the Company’s expectations, the first quarter result for 2015-16 is earnings before interest, tax, depreciation and amortisation of around $3 million “with a small loss at the net after tax profit level, level. This result included the effect of the loss of a key vendor, Crestron.”
The company said in yesterday’s statement that it “will benefit in the second half of FY16 from the improvements outlined above and the anticipated increased profitability coming from operational changes, the ongoing reduction in operating costs, and positive results from closer margin management.
"The Board reaffirms its strategy to be a value-added distributor of integrated technology and communication solutions that inspire, protect and improve people’s daily lives and the environments they trust the most: their homes, schools, hospitals, aged care facilities, educational institutions, workplaces and governments,” directors said.
And, since May this year, "our Board and senior management have acquired approximately 1 million shares in Hills.”
"The Board looks forward to providing more details on the execution of its strategy at the Annual General Meeting on 26 November 2015,” directors said
Mr Pretty left Hills in late May after reporting a sharp fall in interim 2014-15 earnings in February, and then another earnings downgrade in late April. A month later, Mr Pretty was gone and replaced by Mr Logan.
Chairman Jennifer Hill-Ling said the board had reviewed and refined the company’s strategy and committed to consolidating and growing the business.
“After discussing the refined strategy with Ted, we have agreed that this is the time for a change in executive leadership,” she said in a statement.
“Ted leaves the company with a strong balance sheet, a simplified business model and the thanks of the board.”
