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Focus Falls On Hills’ Partnership With Woolworths

Focus Falls On HillsUnder a licensing agreement formed last year, Woolworths has exclusive rights to the Hills heritage brand, encompassing more than 240 products, with the licence to run for a minimum period of seven years.

As reported by Fairfax Media, Hills chief executive officer Grant Logan has declined to comment on what might happen to the Hills product range and deal with Woolworths should Woolworths decide on major structural changes for the Masters business.

Fairfax has reported that Logan has confirmed that under the deal most of Hills’ range is channelled through Masters stores.

The deal sees Hills receive income from the use of the brand and intellectual property by way of an annual licensing fee, with products marketed and distributed exclusively by Woolworths.

Hills chief executive officer at the time of the agreement Ted Pretty stated it would allow Hills to focus on building its technology business, particularly its security and healthcare portfolio.

“Additionally, we will enjoy greater certainty of earnings and a strengthening of our profit performance,” Pretty stated at the time. “There will be a positive impact on the balance sheet from the reduced requirement for working capital.”

Logan, formerly Hills’ chief operating officer, was appointed chief executive officer in May of this year.

Hills’ loss for the 2015 financial year compares to last year’s net profit after tax of $24.8 million. Impairments for 2015 totalled $94 million, with underlying net profit after tax of $11 million down from last year’s $27.3 million.

“We have undertaken significant activity to position Hills as Australia’s first choice value-added distributor in the security, AV, communications and health service sectors,” Logan stated upon announcement of the results today.

“While most of the initiatives necessary to achieve this position have been completed, we will continue to refine our operational processes to support our staff in customer service excellence and restore supply chain efficiencies.”

Logan stated that Hills “is still a profitable company after the restructure and divestment, but most importantly, the earnings now come from the technology and health sectors, where the risk profile is substantially reduced.”

“However, it will takeĀ  further time to return the businesses to the profit levels we expect,” he commented.