Cellnet Group Limited profit results for the last fiscal year are likely to turn out worse than the company’s previously downgraded market advice.
The distributor has told the Australian Stock Exchange that while the 2005 year results are still being finalised it is already clear that net profit after tax will be approximately $6.1 million. This is less than the Company’s previous forecast net profit after tax of between $7.3 million and $7.5 million.
The second half of the year turned out something of a disaster for the company which despite significantly higher revenues than previous years failed to match last year’s profit levels.
A Cellnet statement to the exchange blamed “lower than expected performance in the markets for the Company’s higher margin products with a decline in the average margin” and a decision to increase inventory write offs.
New managing director, Adam Davenport, has been undertaking a detailed review of the Company’s structures and operations and a comprehensive program to reorganise the structure of business units and management has been approved by the board claims the company.
The Group also plans to make “substantial reductions” to its inventory and will focus on holding that inventory which has both high demand and high profitability.
As part of the reorganisation the Company has created a new role of General Manager Supply Chain. An experienced, senior manager has been identified and it is anticipated he will take up this role shortly.
Cellnet Group expects to announce its results in the week commencing