Northamber laments 'disappointing' H1
Distributor's interim results paint a gloomy picture, but margins are up and its balance sheet is 'strong'
Northamber is remaining optimistic about delivering a return to profitability in the "medium to long term", despite a bigger loss in the first half of its new financial year.
For its interim H1 results ended 31 December 2015, the firm posted turnover of £32.5m, compared with £35.7m the same time last year, with gross profit slipping to £2.242m, compared with £2.440m the previous year. Adding to the misery, overall losses leapt to £547,000 compared with £292,000 in the first half of the previous year.
The firm was already on the back foot, after being hit by a "sales hiatus" over uncertainty surrounding Windows 10 in the second half of its previous financial year.
Chairman David Phillips said the combination of investing in staff skills and the business restructure had contributed to the loss.
"The group has two areas of focus: the long-standing high-tech distribution model, and the retail sector that utilises our storage and logistics strengths," Phillips said. "Across calendar 2015, the progress in revenue growth was positive. Management actions taken for the longer term resulted in the less satisfying second-half 2015 statistic.
"Steps taken to increase the skill levels of our staff did serve to spur the achievements of our planned strategy; and our actions to concentrate in more profitable areas resulted in consolidating margins with a slight improvement, compared with the first half of last year, rising from 6.8 per cent to 6.9 per cent - while minor, not insignificant given the prevailing market conditions of uncertainty and lost revenue."
But he said the improved margins were "not sufficient, however, to compensate for the higher staff costs and comparative loss of turnover".
"As a result, primarily of one-off staff recruitment costs, overheads were some £190,000 higher than for the same period in the previous year. A most disappointing short-term result, though there should be further benefits accruing from this strategy over the medium term," he said.
On a more positive note for the Chessington-based distributor, its balance sheet showed a cash balance of £3.8m, compared with £2.6m the previous year.
Phillips said: "Our continuous tight cash and working capital control is the reason we remain so financially strong and liquid, irrespective of the turmoil within the sector." He also tipped his hat to the dedication of Northamber's staff: "We appreciate the strain put on our staff during these very difficult trading conditions and together we are working to overcome them as well as possible."
Looking ahead, Phillips said the past six months have "demonstrated the complexities of the market".
He added: "With the current marketplace uncertainties, it is difficult to indicate a near-term return to profit. We are confident in the medium and long term of delivering profitability due to already evidenced underlying growth, supported by our strong financial position and infrastructure."