Cellnet cuts staff

ASX-listed distributor Cellnet has retrenched around 40 staff following a company-wide restructure and lower-than-expected profit result for the 2004-2005 financial year.

Adam Davenport, managing director at Cellnet, told CRN the cuts came from across the organisation "as a result of the drive to reduce operating expenses". He didn't discount the possibility of further staff reductions.

He said the distributor had gone through the "first stage" of reorganising the business melding together its IT Wholesale (ITW) and Cassa businesses as well as its audio-visual and telecommunications accessories divisions.

“We are also looking at doing some things in our distribution centre in a different way in terms of the way we manage our stock holdings,” Davenport said.

Davenport said earlier this month that this would include making substantial reductions to the number of individual stock items held and its levels of inventory. “We will focus on only holding the inventory which has both high demand and high profitability,” he said at the time.

On 9 September, Cellnet Group reported an after-tax profit of $6.1 million on revenues of $586 million for the financial year ending 30 June.

The company had previously forecast net profit after tax of between $7.3 million and $7.5 million.

At the time, the company said its results were impacted in the final months by lower-than-expected performance in the markets for the distributor’s high margin products coupled with a decline in the average margin.

Davenport admitted that the IT market was tough at the moment. “It’s a pretty tough market –- there has been some difficult retail conditions and that has affected us,” he said.

“Some retail organisations are doing a lot worse than they would have liked,” he said. Cellnet sells a great deal of products into the retail market.