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A Renaissance of sorts but there's still a way to go

Friday 15th August 2003

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At first glance Renaissance Corporation would appear to be making a comeback. The computer and software distributor recently boosted its half-year net profit to $700,000 from $67,000 in the previous corresponding period, and its shares have hit a 52-week high.

A closer look, however, reveals operating revenue was down 15% to $50.5 million against the previous period and much of the profit increase was attributable to a one-off cost of $528,000 during the same six months a year ago.

The company has operated in a torrid environment, though, and has undergone a rigorous cost-cutting programme, including downsizing inventory and reducing staff overheads.

With that in mind, most of Renaissance's troubles seem to be behind it, in particular the company's Conduit subsidiary, which can now cover costs with on-going revenues.

However, as the directors' noted at the time of the result, the PC and software market remains subdued while the relative strength of the Kiwi dollar and competitive pricing in the global IT market continue to put pressure on margins.

The company's emphasis on exclusive, value-added brands should at least produce more predictable results, the directors noted.

This year the shares have climbed from just over 20c to their current price of about 45c. But they are a long way from the dizzying highs of $1.20 in early 2001.

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