Hills Profit Guidance Lowered For FY
Hills’ revised full-year guidance is now for net profit after tax in the range of $11 million to $14 million. Hills had previously forecast net profit after tax in the range of $18.5 million to $19.5 million upon announcement of its 2015 first-half results in February.
“While sales to March in our core security, AV, audio and communications businesses were near internal forecasts, we now anticipate continued delays in project starts,” Hills stated.
“This is due to lower government spending and project deferrals across the construction, health and mining sectors, which have become more pronounced during April.”
With margins having declined materially in March, Hills stated it expects this trend to continue April through June, which it attributed in part to not being able to recover margin compression as a result of the year-on-year decline in the Australian dollar.
The company added that while in prior years its results have typically been strongest in the fourth quarter, based on its April results over the first three weeks of the month, along with a re-examination of its sales pipeline, that “this is not expected to be the case this year”.
“The company continues to accelerate its efforts to reduce group overhead and drive further structural efficiencies in its core business,” Hills stated. “This will include removing the additional fixed costs that have been maintained in anticipation of a large acquisition. However, the company will continue to invest in front-line sales and service resources.”
As of 1 May, fees paid to non-executive directors will be reduced by 20 per cent “in recognition of the reduced size of the company and the need to focus on costs”.
Hills stated its strategic focus on security, AV, audio, communications and health technologies “is sound”, stating it remains committed to growing both organically and by acquisition, with it also continuing to evaluate opportunities to acquire new service revenue streams in the communications and health sectors.