An efficiency drive and a "cautious trade credit strategy" helped distributor Northamber boost profitability during a solid 2010 fiscal year.
Over the past two years the broadliner's numbers have been dogged by plummeting revenues and an uncharacteristic amount of red ink. For the year to the end of June, the firm's sales were down almost eight per cent on FY09, standing at £128.5m.
In his chairman's statement, David Phillips said sales were "constrained by both demand levels and sector price deflation".
But Northamber's profit from operations stood at £116,000, compared with a £320,000 operational loss last year. Added to investment revenue of £140,000, the distributor banked total net income of £170,000 in FY10.
The broadliner also enjoyed overseas success, boosting mainland European revenue by more than 40 per cent to almost £21m. The firm also generated £1.9m of business outside Europe from scratch.
After a series of increasingly bleak statements, Phillips' statement today displayed a good deal more optimism. He claimed his firm's quest to improve efficiency had finally borne fruit in the fiscal year's closing quarter.
"Whilst difficult trading conditions still prevail, we are probably now better aware of the factual obstacles we need to overcome or avoid," he said. " Early indications are that the improved trends seen in the last quarter of 2009/10 may be continuing into the current year.
"As we move forward, whilst ensuring that we continue with our strong financial position, we look forward with a degree of optimistic caution to the year ahead."
Northamber's operational outgoings were cut by £1.26m last year. Bad debt stood at £38,000 – equating to 0.03 per cent of total sales. Phillips hailed the distributor's adroit and prudent approach to credit management.
"With our trading model dependent on high revenues and low margins, total bad debt of only £38,000 demonstrates our cautious trade credit strategy in the varying levels of ongoing uncertainty. Credit risk is a significant factor and one that has dominated our sales strategies over the recent years," he explained.
"One strong benefit of such an experienced board has been the management of what was seen as a predictable and enhanced re-run of previous credit cycles."
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