Despite H1 revenue drop, Hills expect a profitable year

Hills announced its FY18 first-half results, showing a $21 million decline in revenue but a reduction in net debt of $4.8 million.

The company attributes the fall in revenue to the exiting of the unprofitable NBN satellite installation business and a shortfall in antenna sales due to the competitive pay-TV landscape.

"I am pleased with the overall first-half performance of the company and look forward to achieving continued improvement in the second half," Hills CEO and managing director David Lenz says

"Based on the first half results and Hills' current strategic initiatives, the company continues to anticipate delivering a trading profit in the second half of FY18.

Hills Security, Surveillance and IT business, comprising the group's largest division, delivered 4% growth over the corresponding half in FY17 while maintaining similar margins.

This success was fuelled by growth in many of Hills key vendor sales including Genetec, UTC, Axis, Pelco, Vivotek and TruVision.

The IT business had very strong sales in the first half, with networking vendors Ruckus, Brocade and Extreme Networks all achieving growth.

Hills Australian SMB business and Hills New Zealand are both expected to strengthen their performance in the second half.

Lenz says, "It was encouraging to see the growth in the largest part of Hills business in the first half. With the successful launch of our new distribution centre and eCommerce platform, we expect to see continued growth in the current half.

Hills Audio Visual (AV) business saw revenues decline slightly, but has maintained solid margins, limiting the profit impact.

"Despite changes to its vendor portfolio, the AV business has seen strong sales growth from many of our key brands," Lenz says.

"We are also excited about the opportunities within our Unified Communications business with new initiatives from Yamaha and Revolabs."

The Australian monitor division has completed an upgrade of its product line, which was shown at the recent ISE trade show in Amsterdam, and is also expected to deliver sales growth over the next 12 months.

Lenz says, "We also expect to be able to announce the addition of a number of complementary new vendors to our AV business shortly, which will see Hills deliver additional growth over the next 12 months.

Connection solutions saw margin improvement based on the decision to focus solely on fixed wireless installations.

There was also the successful launch of its eCommerce platform across Australia and New Zealand.

Lenz says, "the launch of the new eCommerce site ushered in a new era in customer service at Hills. Early indicators are we would expect to see a sales uplift of over 10% based on similar system deployments in the ANZ market and a similar improvement in overall productivity.