| Singapore-listed Procurri Corporation reported net profit of S$2.7 million for 1H2020, close to the S$2.6 million figure for 1H2019. The 1H2020 bottomline would have turned a little red (net loss of S$0.9 million) if not for S$5.5 million of "other income", mainly from US government support related to Covid lockdowns.
Procurri's hardware generally go for large discounts (50-80%) to OEM pricing. But other business activity, especially its third-party maintenance which has good gross profit margins, was sharply curtailed by lockdowns, said Procurri chairman Sean Murphy at a 2Q results briefing. "I don't think there's demand destruction. These projects will still be there but they're definitely delayed." |
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Mr Murphy expects that there will be a big tailwind for Procurri when the pandemic eases.
In particular, one business segment -- IT Asset Deposition (ITAD) -- is already doing well even in the midst of the lockdown because companies are migrating to the cloud.
Procurri has signed up ITAD deals with large companies whereby they outline schedules over the next three or four years about IT assets that will be decommissioned. Procurri can pre-sell the components.
Procurri expects that its ITAD business, which has teamed up with Ingram Micro since last November, will experience accelerated growth.
"It's a direct correlation to cloud migration -- the faster the cloud grows, the faster our ITAD grows. This is a huge opportunity for the future, it's coming even faster than I could have expected 12 months ago," said Mr Murphy.
He added: "Eventually this business will be bigger than the others (IT distribution and Lifecycle Services) put together."
 CFO Vincent ChooThe lockdowns crimped many businesses around the world, disrupting supply chains and reining in customers' purchasing decisions.Procurri managed a 1.6% rise in revenue to S$110.5 million in 1H2020. Gross profit (S$32.9 million) took a hit (-16% y-o-y) primarily due to an increase in allowance for stock obsolescence. But Procurri continued to generate positive cash flows from operations (S$18.9 million in 1H2020 versus S$25.8 million in 1H2019). Procurri maintained a strong balance sheet and was in a net cash position of S$17.7 million as of end-June 2020. |