Commander's shaky profits part of "the plan"

The company's financial year pre-tax profits for the year are between $4.5 to $7 million (excluding abnormal charges.) This is an extensive drop from its prediction of $20 to $30 million.

Embattled Commander told its shareholders that the primary reason for this shortfall was the rapid decline in sales of standalone IT hardware products and associated services.

“Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) contribution from IT hardware is expected to fall short of the level assumed in the previous guidance by approximately $8.8 million,” stated Commander.

“In addition final results for December 2007 and January 2008 were not available when the previous guidance was issued. Actual EBITDA performance in December and January was $4.4 million below that assumed at the time the previous guidance was issued.”

According to Commander, the performance of Nexon Asia Pacific business - in the period up to of the sale of the business by Commander on 28 March – created a negative variance of $1.2 million compared to the previous guidance.

Commander’s managing director, Amanda Lacaze, said the service provider expects to report a positive operating and investing cash flow for the period 1 January to 31 May – predicted to be in excess of $5 million.

“This is a vast improvement on the first half of FY08 when the business showed a negative cash flow of $118 million for the six month period ending 31 December 2007,” said Lacaze.

Commander’s Board previously warned its shareholders that there were execution and timing risks associated with the company’s ‘Turnaround Plan' – implemented on 30 January, claimed Lacaze.

“We are now four months into the ‘Turnaround Plan’ and have a clearer view of the impacts of the ‘Plan’ and the time required to achieve its outcomes. It is important to note that the transformation of Commander is not a short-term task and will take two to three years to complete,” she said.

Lacaze said the news of Commander’s revised pre-tax profit forecasts comes just as Commander was cleared by the Workplace Ombudsman of any wrong doing in the axing of 600 employees.