Coventry in nuts and bolts restructure

Industrial products distributor Coventry Group will embark on a restructure, including warehouse closures and around 100 job losses, after it forecast an increased loss for the first half of the financial year.

The forecast after tax operating loss for the six months will be between $2.5 million and $3.5 million, the group said.

It will be the second restructure in 24 months for the company, which in 2013 exited its furniture component business.

The company said it would exit its IT solutions business MSS by the end of March, eliminating an EBITA loss of $0.6 million in the first half of the year.

Coventrys will focus on two key business units – Konnect, a bolt and fastener specialist, and Coopers, which deals in fluid systems.

The company will close its Sydney and Adelaide distribution centres, while capital investment in its remaining centres is estimated to save up to $4 million in annual operating costs, it said.

Total savings, including the redundancies, are estimated to be between $6 million and $7 million.

Group chairman Neil Cathie said the Coventry required significant change to deal with headwinds impacting all its business units.

“The restructure announced today will transform Coventry into an organisation that is more able to respond to the realities of a keenly competitive and cyclical marketplace,” he said.

The company has also watered down its acquisition strategy, saying it was to be a lower priority.

Coventry shares were up 1.7 per cent to $2.40 at the close, down from a 12 month high of $3.45 in July 2014.