Hills announces a return to profitability
Hills has announced its FY18 results that show the company has returned to profitability, delivering an $8.3m improvement on the previous year’s results. The company’s margins remain steady despite a revenue decline of $26.3m for the full year, following the decision to exit the NBN satellite installations, as well as lower antenna sales in the competitive Pay TV market in Australia and New Zealand.
The FY18 net profit after tax (NPAT) was $0.4m, which is an $8.3m improvement on the FY17 NPAT result and represents a significant turnaround for the business.
“In recent years the company instigated a strategy to redefine and restructure the business and I am pleased for our shareholders, customers, vendors and employees that Hills has returned to profitability,” says Hills chief executive officer and managing director David Lenz.
“In FY18 Hills set about delivering on a number of key initiatives outlined in detail at our AGM, and it was pleasing to see the business deliver against these objectives during the year, in particular the e-Commerce platform and the establishment of a National Distribution Centre and Trade Centre at Seven Hills in New South Wales. Hills will continue to deliver the best possible customer experience and we remain focussed on implementing key business improvements in FY19.”
During the year Hills extended its agreement with Ericsson for the installation of fixed wireless services associated with the NBN rollout until 2020 and extended the agreement with Genetec for exclusive distribution across Australia and New Zealand until 2020.
The company also continued to build and invest in its portfolio, attracting global technology leaders including Dahua Technology, MC2 Audio, XTA Electronics and Xilica Audio Design.
Hills Security, Surveillance and IT business had a solid result, delivering 2% sales growth over FY17.
“I am encouraged by our overall progress and with improvements in our vendor portfolio and the continued sales momentum of exclusive vendors Genetec and UTC, we expect to continue to grow in FY19,” says David.
The Hills Health business also continued its momentum with Nurse Call sales growth of 26% over FY17. The strong performance in the Nurse Call business was partially offset by a slight decline in Patient Engagement revenue but the overall margin quality improved for the full year.
“The health team has delivered an outstanding result and our success in our market-leading Nurse Call business has resulted in a strong backlog of contract work, over $7m, to be completed in FY19,” says David.
“We continue to drive growth in our Nurse Call business and invest in research and development to progress and productise the next generation of iP7500 Nurse Call technology and staff terminal solutions to maintain our market leadership.”
Although revenues for Hills AV business declined for the full year on the back of changes to the vendor portfolio, margin quality held against the previous year.
A new Australian Monitor product line was launched at Integrate 2018 and is expected to drive sales growth over the next 12 months.
“The AV business has seen major growth in key vendors such as Williams Sound and Community Professional Loud Speakers, along with strong performances from Denon, Barix, Renkus-Heinz, Media Matrix, Biamp Devio, Yamaha and SunbriteTV brands in FY18,” says David.
“The addition of new vendors into the AV portfolio, along with expected growth from our existing vendor brands, indicates a more positive outlook for our AV business over the next 12 months.”
Similarly, the Hills Antenna business saw sales impacted by the competitive Pay TV market across Australia and New Zealand but continued to make a significant contribution to the Group Business and margins remained strong for the full year.
“Customers appreciate our commitment to source product from our Adelaide factory where we continue to manufacture the Hills Black Arrow antenna and Foxtel satellite dishes,” says David.
Finally, Hills Connection Solutions delivered a solid result, with stronger margin quality in FY18 based on the decision to focus on NBN fixed wireless installations.
“While we still have work to do, we are confident that the strategies undertaken in FY18 and the continued focus on reducing operating expenses, strengthening customer and vendor partnerships and the rollout of our digital transformation project will deliver an increased profit in FY19,” says David.