Hills Ltd trims staff following distie business restructure

Distributor Hills Limited has revealed it had let go 39 of its staff following a restructuring of its IT distribution business earlier this year.

Addressing shareholders, managing director David Lenz said the restructure occured in June and prompted by the COVID-19 pandemic.

He said the restructure aimed to prepare Hills for “the post-COVID trading environment” and placed greater focus on state-based profitability and ownership. The restructure cost the company $1.2 million, but had projected annualised savings of $3.9 million following the job cuts.

Lenz also revealed how Hills’ distribution business was affected by COVID-19, reporting “a significant number” of project cancellations and delays. Its SMB business servicing division had a relatively stable underlying run rate after the lockdowns were lifted but ultimately was not enough to cover the shortfall in margins.

“With the advent of COVID-19, whilst there was no play book, we focused on a number of key areas in order for the company to come out the other side of the pandemic in the best competitive shape possible,” Lenz said.

The company worked to cut down its net debt by $20.2 million to $8.2 million, accepted support from the government, landlords and staff, streamlined its product portfolio, and implemented health and safety measures.

The Hills Technical Services (HTS) business also remained trading “solidly” on the back of the work with Ericsson related to the NBN rollout and support.

“The distribution business has benefited from the hard work undertaken to streamline this business, reduce operating expenses and manage working capital,” Lenz said.

“This work delivered a solid start to the year, which saw the business return to profitability and despite the adverse impact from COVID-19 in the second half, the business delivered an improved earnings performance for FY20 before one-off costs as outlined previously.”

Looking forward, Hills will continue focusing on margin improvements in the distribution division, including a renewed focus on state-based profitability metrics, improvements to customer experience, and drive growth among its vendor partners, HTS and its ecommerce sales.