ASX listed IT distributor Dicker Data (ASX: DDR) says it is aggressively seeking new distribution opportunities in New Zealand following Cisco’s decision earlier this month to terminate NZ distribution through the company.
Dicker Data yesterday posted its annual results for the half year to June 2017 showing an after tax profit from its NZ business of $A1.58m ($NZ1.73) on revenues of $A63.87m ($NZ69.94).
It is forecasting second half NZ revenues to be flat as a result of Cisco’s decision and says it will restructure its New Zealand “so that the cost structure is appropriate to the adjusted level of expected revenue from the remaining vendors,” and look for new distribution opportunities.
In a statement the company said: “Over the course of the next few months we will be selling down Cisco inventories and working with Cisco to transition our partners. Whilst we disagree with Cisco’s decision, given Dicker Data’s strong expertise and partner relationships in the enterprise and mid-market communities we will be actively looking to form new tier-one vendor relationships in New Zealand.
“We remain committed to the New Zealand market, but to ensure the viability of the business we will be restructuring so that the cost structure is appropriate to the adjusted level of expected revenue from the remaining vendors, whilst aggressively looking to fill the revenue void with potential new vendor targets.”
When Cisco’s decision was announced on 15 August, Dicker Data shares fell 9.5 percent to $2.42 ($NZ2.65), after reaching a peak for the year of $A2.71 on 2 August ($NZ2.97). They have since recovered slightly closing at $A2.51 ($NZ2.75) on 28 August.
In its half year results announcement the company reaffirmed its previous guidance of $A40m ($NZ43.8m) in pre-tax operating profit for the financial year to December 2017.