KAZ cuts losses, readies for new year growth

Outsourcing specialist KAZ Group has upped revenue 16 percent to $215 million and cut its net losses 150 percent in the last half-year.

The company's six months to 31 December 2003 results announcement to the ASX said that it had lifted revenue from ordinary activities 16 percent to $214,984,000.

Earnings before interest, tax, depreciation, amortisation and 'correction of fundamental errors' were down 15 percent to $17,132,000.

Net loss for the period attributable to group members was $1,554,000 million -- 150 percent less than in the previous half-year period.

Peter Kazacos, CEO at KAZ Group, attributed the up-turn to a long-delayed improvement in overall market conditions for the group's activities.

'Some of our customer base is starting to spend again. Not to the internet boom era type of dollars, but more than the bottom of the market,' he said.

He warned that the upswing was unlikely to signify a return to the heady days of the 1990s, saying the increased spend was mainly about technology refreshes that was already overdue by at least a year.

'The other thing that's also starting to come through is that the strong Australian dollar is actually making some products more affordable,' Kazacos said.

Newer products introduced some time ago that had failed to take off were gaining popularity as they became relatively cheaper. Examples were VoIP, CRM and data storage products, he said.

'The move now to some lower cost CRM-type solutions, with the new Microsoft offering, might get people starting to look at this again,' Kazacos said.

Meanwhile, KAZ Group had itself deployed IP telephony in its new premises. 'We're eating our own cooking,' he said.

Kazacos tipped server consolidation, Windows upgrades and selective sourcing deals to also do well this year.

However, wireless still had a way to travel before it became a serious source of revenue.

'Wireless topologies and stuff are still solutions looking for a problem and it will take a little bit longer before that takes off,' Kazacos said.

KAZ Group had worked through a restructure, management shuffle and corporate governance assessment by Ernst & Young which had taken resources in the half-year to December 31. However, those processes were largely concluded, Kazacos said.

'The only area of disappointment was that we didn't win as much business process outsourcing as we wanted to,' he said.

Education sector deals had been thinner on the ground than hoped. 'There were too many players in that space, I think,' he said.

However, the 'right balance' had been achieved so KAZ Group expected to see that business pick up this year, Kazacos said.