Hills Limited is close to curbing its financial woes as it expects to reduce its losses by up to $60 million.
Chief executive David Lenz announced that the distributor expects a statutory loss between $6 and $8 million for the 2017 financial year, a marked improvement from the $68.3 loss in FY16.
The company made efforts to bring down operating expenses by flattening its organisational structure, which it expects to deliver a $12 million annualised reduction in expenses.
Lenz said that Hills Health Solutions' profitability was up year-on-year off the back of some major contract wins with health technology provider Lincor Solutions, including a deal with the Sydney Local Health District.
Last year, Hills planned to demerge the $31 million health business and merge it with Lincor to form a new company that would list on the ASX. The deal was cancelled in January when the two companies couldn't come to an agreement on pre-IPO funding.
Lenz said that profitability was also affected by Hills' decision to exit NBN satellite installations.
"The operating cash flow is currently targeted to be neutral for the second half of FY17 inclusive of restructuring costs and charges associated with the proposed Lincor transaction, which were paid in the second half," Lenz said.
"Given our investments, the reduction in operating expenses, strong customer and vendor relationships and increased profitability in the Hills Health business, we expect to return profitability in FY18."
Hills also announced it has begun developing a new digital platform for partners expected to launch in the third quarter of 2018.
The platform will include handful of new features aimed at increasing sales, including 24/7 ecommerce availability, live inventory availability, access to all account information including statements, invoices and price books and the ability to update details and make payments online.
Hills' full year financial results will be announced in August.
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