UK tech distributor Northamber has said margin growth has been outweighed by “frustrating” factors that are out of its control.
Reporting on its financial results for the year ended 30 June 2022, the wholesaler said two major negative factors on its bottom line were increased delivery costs and the fall in the value of sterling.
Distribution costs increased by almost £1 million to £5.56 million as Northamber continued to invest in developing the team for its “significant growth ambitions”. However, it was also affected by steep increases on carriage costs (which is its biggest non-payroll expense).
The fall in the value of the pound translated into a swing from a foreign exchange profit of £223,000 in 2021 to a loss of £164,000 in 2022, which was the main driver in increased administration costs from £2.84 million to £3.36 million.
“It is frustrating that factors over which we have no control have led to increases in distribution and administration costs, which have outweighed [gross profit] growth,” said Chairman Colin Thompson in a statement.
Northamber reported an operating loss for the year of just under £500,00 compared with a profit of £400,000 in 2021. EBITDA slipped slightly into the red to the tune of £75,000.
Revenue for the 2022 financial year was £66.3 million, up by more than 10%, with gross profit climbing by around 8.5% to £8.5 million. Gross margin was down by 20 basis points to 12.8%.
Increased investments in inventory caused Northamber’s cash reserves to fall by £3 million to £4.7 million. Some of that will be recouped this year by the sale of the office premises of AVM, the audiovisual distributor it acquired in 2020.