Hills Industries Limited (HIL) reported a 41.6% slump in net profit to $28 million for the year to 30 June 2009. The result, which was in line with previous guidance, came despite record group revenue over the year.
Hills Industries also said that it would become the latest in a long line of companies to tap the market for extra funds to strengthen the company’s balance sheet.
The company recorded $1.2 billion in revenue, up from $1.18 billion or 2.2%.
Hills Chairman, Ms Jennifer Hill-Ling, said the slowdown in economic activity in Australia had significantly impacted the company.
”As we stated in our first half results, the margins on Hills record revenue were eroded by unprecedented volatility in steel prices and the effect of the devaluation of theAustralian dollar,” Ms Hill-Ling said.
”We have seen some of this reverse in the latter part of the second half of the year.”
Looking ahead Ms Hill-Ling said conditions were expected to improve for the company which manufactures, imports and distributes electronics, home, hardware, building and industrial products in Australia and overseas. ”As such we expect trading conditions to remain subdued in the first half of the 2009-10 financial year, however we are forecasting improved trading conditions in the second half of the financial year,” Ms Hill-Ling said.
Some of the improvements would be the result of structural changes undertaken within the company.
Commenting on the capital raising, Hills said it was expecting to raise up to $50 million, through a placement at $1.40 per share.
At the close of business Tuesday, Hills shares were $1.745.
”Following this capital raising, the company will have adequate debt facilities to weather the current trading conditions, while at the same time providing flexibility to pursue acquisition opportunities that may arise in the future”, Ms Hill-Ling said.
Across the business divisions, the company said the Electronic Security & Entertainment and the Building & Industrial Products divisions had performed as well as could be expected, however the Home, Hardware & Eco division “delivered a very poor result”.
Ms Hill-Ling said the company had reversed its long-standing policy of distributing 100% of profit to shareholders.
Instead the board has declared a dividend 2c final dividend, bring the annual dividend to 10c, or around 60% in earnings.
