Renaissance mulls restructure, redundancies

By Phil Boeyen, ShareChat Business News Editor

Thursday 6th December 2001

Pressure on profit margins has prompted tech distributor Renaissance (NZSE: RNS) to rethink its product offering and could result in some redundancies.

The company has announced plans to drop a number of non-exclusive distribution arrangements as part of a restructuring designed to focus on profitable core distribution activities.

Managing director, Mal Thompson, says distribution margins in the IT industry have been under severe downward pressure for some time.

"While significant cost savings have been achieved at Renaissance through electronic distribution and improved efficiencies, the continuing reduction in gross margins is no longer being offset by increases in sales volume and total revenue.

"Under the proposal, Renaissance will discontinue its non-exclusive distribution arrangements with international brands Hewlett Packard, Compaq, Microsoft and Toshiba, but will continue to distribute a broad range of IT products to its valued dealer customer base.

Mr Thompson says the proposed restructure of the company is in direct response to market uncertainty and the need to reduce business risk and will put the company in a stronger financial position to begin the New Year.

"In addition, Renaissance will focus more attention on products and services for the high growth education market, where the company already enjoys a significant presence through its Apple and other IT-related product ranges."

Renaissance says details of the restructure are not yet finalised and staff have been invited to provide feedback on the proposed changes.."

"Some redundancies are being considered," Mr Thompson says.

The company says the proposed restructuring would have a significant negative impact on the second half's operating result.

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