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Northamber books operating profit, notes caution in economy

Microscope contributor

Northamber has once again sounded a note of caution about the impact of government austerity measures but says efforts to cut overheads and move into new areas helped it push up sales while returning to operating profit.

In a Q1 interim statement that was markedly more upbeat than any quarterly update in recent years, David Phillips, chairman at the oldest IT distributor in the UK, reported that "positive progress" had continued from last quarter.

"The combined effect of greater turnover and our reduced operating cost base was an operating profit compared with the operating loss reported in the comparative period last year," he said.

This was of course helped by "reductions made to the cost base last year" and "continued vigilance in controlling operating costs", which resulted in a further decline in op-ex compared to Q1 2009.

Sales were achieved on lower gross margins, which Northamber said contributed to a "further dilution of our transactional overheads".

Revenues and operating profit figures were not given but the distributor maintained its debt free position and had cash in the bank of £11.6m at the end the quarter, up from £9.1m a year earlier.

However, Phillips - who has been a desperate realist throughout the recession - delivered a sobering message about the potential impact of the coalition's spending cuts.

"Whilst seemingly always to be sounding a note of caution with regards to the future, the fluidity of the economy, the unknown effects of the 'cuts' which have yet to manifest themselves and the scheduled change to the rate of VAT, are all significant.

"In such conditions it is impossible to be anything other than cautious, which is another reason we will continue to place importance in the strength of the balance sheet and the control of our working capital as well as optimising our net revenues."

As reported in September, Northamber has opened Solution Point, a training, demonstration and configuration facility in Weybridge for IBM and its Business Partners. This symbolises the distributor's efforts to shed its box shifting legacy and move into mid-market solutions.


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