Cellnet’s profit drops, restructure to blame

Distributor, Cellnet’s net profit after tax dropped 76 per cent drop to $1.6 million for the year to 30 June, according to a preliminary end of year report.

According to Cellnet, its annual sales increased by eight percent year-on-year to $565 million, up from $524 million. Earnings however, slipped by 62 per cent to $4.5 million, down from $11.b million the year before.

Cellnet’s managing director, Adam Davenport (pictured) said in a statement to the ASX, the fall was due to the distributor’s reorganisation to improve “efficiency and reduce working capital”.

“The reorganisation established a strong foundation for the current year but has had a significant impact on earning for the year ended 30 June.

“The impact on the earnings can be attributed to three factors, second half sales, margin reduction and operating costs,” he said.

According to Davenport, the preliminary net profit after tax (NPAT) for the full 2006 year is $1.6 million.

This incorporates preliminary NPAT for the second half of $0.9 million. This result equals the result for the second half of 2005.

“Management will now focus on growing revenue and improving profitibity,” said Davenport.”

Cellnet has three core business units, telecoms, IT and the Mercury Mobile content division. The company also opened a Canadian office and is now looking to branch out into the UK.