Dell New Zealand sees 16% decline in revenue in FY2024

Dell New Zealand Limited has reported its financial results for the fiscal year ending January 31, 2024, showing a significant decline in both revenue and profit compared to the previous year. The company's results reflect a challenging environment with shrinking market demand and increased operational costs, impacting the overall financial performance.

Revenue and Profit Analysis

For the fiscal year 2024, Dell New Zealand recorded total revenue of $240.3 million, a 16.5% decrease from the $288.0 million reported in the previous year. This decline was primarily driven by reduced sales of hardware and software products, which fell from $237.3 million in 2023 to $194.3 million in 2024. The company also saw decreases in its managed storage services and customer services revenue, reflecting a broader industry slowdown.

Despite these challenges, the company's revenue from professional services grew from $3.98 million to $5.56 million, signaling a potential shift in focus or increased demand in this segment. However, the growth in this area was not enough to offset the overall decline in total revenue.

The decline in revenue directly impacted the company's profitability. Dell New Zealand's gross profit dropped to $21.8 million, down from $30.1 million the previous year, representing a 27.7% decrease. This decline in gross profit was exacerbated by ongoing costs, with general and administrative expenses and selling expenses amounting to $7.4 million and $13.1 million, respectively.

Dell New Zealand reported a net profit of $2.96 million for the year, a sharp decline from the $5.16 million reported in 2023. The significant decrease in profit underscores the impact of declining revenues and the company's inability to proportionally reduce costs to maintain its profit margins.

Operational and Cost Management

Cost management remains a critical focus for Dell New Zealand, as reflected in their financial statements. The company managed to slightly reduce its general and administrative expenses from $7.8 million in 2023 to $7.4 million in 2024. However, selling expenses saw a more considerable reduction from $17.7 million to $13.1 million, indicating efforts to scale back marketing and sales-related expenditures in response to declining sales.

Foreign exchange fluctuations provided some relief, with Dell New Zealand reporting a net foreign exchange gain of $916,294, a turnaround from the $1.4 million loss recorded the previous year. Additionally, finance income increased to $340,226, up from $200,386, contributing positively to the overall financial performance.

However, these gains were not enough to offset the losses in operational areas, leading to a lower profit before tax of $2.54 million, compared to $7.28 million in the previous year.

Balance Sheet Highlights

Dell New Zealand's financial position at the end of FY2024 shows a contraction in total assets and liabilities. Total assets decreased from $159.6 million to $126.7 million, primarily due to a reduction in current assets such as trade and other receivables, which fell from $55.6 million to $20.5 million. Inventories also declined significantly, from $13.7 million to $8.8 million, reflecting lower stock levels in response to reduced sales.

On the liabilities side, the company successfully reduced its total liabilities from $142.9 million to $106.7 million. This reduction was achieved through a combination of paying down trade payables, which dropped from $19.4 million to $8.9 million, and reducing contract liabilities from $71.4 million to $38.3 million.

Dell New Zealand's equity position improved modestly, with total equity rising from $16.7 million to $20.0 million, largely driven by the retention of earnings and an increase in the share option reserve.

Conclusion

Dell New Zealand's financial performance in FY2024 reflects a challenging year, marked by declining revenues and profits. The company's efforts to manage costs and reduce liabilities have partially mitigated the impact of reduced sales, but the overall decline in profitability highlights the difficulties faced in a competitive and shrinking market. Going forward, Dell New Zealand will need to explore new growth avenues, particularly in professional services, and continue to optimize its operations to navigate the uncertain economic landscape.