- Shriro (SHM) is scrapping its Australian kitchen appliances division due to financial losses brought on by intense competition in the market
- The company says the loss of an unnamed major retailer for the Omega brand was a catalyst for the exit
- The revenue generated by the kitchen appliances division was $37 million for the 12 months ending February 28, 2023, but this wasn’t enough for it to be profitable
- Shriro will now restructure its business, including closing its Dandenong warehouse, resulting in some one-off costs for its 2023 financial year
- SHM shares were down 6.67 per cent, trading at 70 cents at 1:43 pm AEDT
Shares in Shriro (SHM) have sunk today following news the home appliance company will leave the kitchen appliances division in the Australian market due to financial losses.
SHM said the move came as a result of intense competition in this segment of the consumer goods market, with numerous well-capitalised global manufacturers.
The revenue generated by SHM’s kitchen appliances division was $37 million for the 12 months ending February 28, 2023, but the company said its margins had been squeezed by market pressure, resulting in losses.
The company cited the loss of a major unnamed retailer for the Omega brand as the main reason behind the decision to exit the kitchen division in Australia.
Shriro said it would now restructure its business, including closing its Dandenong warehouse, which would result in some one-off costs in FY23.
This is to ensure the business continued to operate efficiently and offset the impact of the loss of revenue.
SHM said the exit would not have a negative impact on the group’s profit from July 1, 2023, onwards.
Furthermore, the company said there would be a release of cash from its debtors and inventory of approximately $12 million, which will be collected in the first half of 2024.
The New Zealand appliances division of Shriro will continue trading as usual.
Moving forward, the company said it would continue to focus on its global expansion of the seasonal business, which included BBQ products, its distribution business with Casio (AU and NZ) and Pioneer (NZ), and its New Zealand appliances division while pursuing organic and inorganic growth opportunities.
SHM shares were down 6.67 per cent and trading at 70 cents at 1:43 pm AEDT.