Electronic commerce has become a powerful driver of growth at Kewill Systems Plc, the UK-based supply chain management company. A new management over the past year has turned a loose federation of companies into three closely-related divisions. Moreover, some astute acquisitions in the US put Kewill in a powerful position as major corporations automate the supply chain with electronic document interchange.
Kewill’s revenue rose 34.7% in the year through March 31 to 60.1m pounds ($85.5m), although a 3.2m-pound charge relating to purchased intellectual property rights and goodwill left net profit up by just 1.4% at 3.6m pounds ($5m).
Chief executive Geoffrey Finlay says the company is still on the lookout for acquisitions and competitors in the US are likely to be the main targets. Equally, its design business in Germany – which has been turned around in the last 12 months so that it made an operating profit of 1m pounds ($1.6m) on revenue of 8m pounds ($12.7m) – is described by Finlay as none-core, so a disposal can be expected once the right offer comes in.
Electronic commerce now accounts for 24% of revenue, compared with 6% three years ago, and the acquisition of Tracer Software Inc in October 1998 (CI No 3,528) has given it an important base with the big package distribution companies such as UPS, FedEx and DHL. With the move by big corporations towards just-in-time operations, the ability to track each consignment becomes crucial and Kewill now boasts a big lead over competitors. E-Commerce showed operating profit of 4.3m pounds ($6.8m) on revenue of 14.6m pounds ($23.2m).
While ERP vendors are currently suffering from the switch in resources to Y2K spending, Kewill’s operation in this sector enjoyed growth of 21.3% and made an operating profit of 5m pounds on revenue of 22.2m pounds ($35.2m). Kewill reckons that its concentration on the SME market, which comprises 90% of US companies, has protected it from the problems of the big players.
Logistics software sales were the most buoyant sector of Kewill’s operations, with sales up 78.1% to 15.2m pounds, although operating profit rose by a modest 16.7% to 2.1m pounds.
With over 26,000 customers, Kewill is looking forward to another period of rapid growth. One of the joys of servicing the supply change is that it is constantly changing and software has to be rapidly adapted. This guarantees a continuing flow of revenue from the existing customer base. Once entrenched in an industry’s supply chain, a software company is difficult to dislodge.
