Northamber's strategy starting to stir more optimism

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Northamber's strategy starting to stir more optimism

Simon Quicke

Northamber continues to move away from "high volume but empty revenue" business but has been forced to make redundancies in its logistics operations to keep on track.

The costs of the redundancies meant the third quarter numbers were dragged down a bit by those costs but the distributor expects it to help get its fiscal year, which finishes in June, in a better position.

"With a return to operating profitability before exceptional redundancy costs for the quarter ended 31 March 2012, the corporate objective of developing our vendor and product mix away from high volume but empty revenue, continued to evolve successfully," stated the chairman David Phillips in the distributor's interim management statement.

Cash reserves increased from £10.1m to £11.2m for the three months ended 31 March year-on-year and gross margins grew by 1% indicating the decisions to move away from vendors that the firm perceived were not delivering benefits to the distributor.

The decision to make redundancies was one taken as a result of the continued pressures running a business facing margin erosion pressure and the statement made it clear it had been done with great reluctance.

"Eventually we had to be realistic for the benefit of all staff and the Company. The savings arising from such action are not immediate because of the redundancy costs but will come through as the calendar year progresses," it stated.

One of the reasons for the firm bringing forward its interim management statement was partly because it had made the move last week to acquire its warehouse facilities for £6.35m and now wanted to fill in investors on that purchase as well as the prospects for the business going forward.

Phillips has always used his chairman's statements as a place to be realistic about the state of the market and his comments at the conclusion of the interim update will have provided cheer for investors.

"Quarter three was encouraging, but it is too early to determine with any degree of accuracy whether "green shoots" are assured. We remain cautious for the remainder of the current financial year albeit perhaps with a little more optimism than we observed several months ago," he stated.

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