KEY POINTS:
The end of an exclusive deal to distribute Apple Macs and iPods took a bite out of Renaissance shares yesterday.
The stock closed down 17 per cent at 58c after Renaissance announced a new agreement with Apple that meant it would lose its sole New Zealand distributor relationship for major retailers. Retail chains will now be able to buy directly from Apple.
Renaissance managing director Paul Johnston said the change to the agreement with Apple was not a "major surprise" and just another shift in the company's business model.
Renaissance last year flagged the likelihood that Apple would seek to extend its direct selling presence in New Zealand.
Apple already sells its Mac and iPod products direct to New Zealand consumers via an online store, a move which is understood to have nibbled away at Renaissance profits.
Johnston confirmed the deal would not open the door for another distributor to step in, saying major retailers had the choice of purchasing through Renaissance or Apple or a mixture of the two.
Renaissance will be reporting its 2007 full year results next month, expecting net profit before tax to be within the $5 million to $5.5 million range previously indicated.
"Even with the expected reduction in turnover and profit that's coming from the distribution side of the Apple business in New Zealand, we're very confident we'll see a modest increase in overall profitability for 2008," said Johnston.
The company has actively sought to diversify its business through last year's purchase of Apple-focused retailer MagnumMac and tertiary education provider Natcoll.
Johnston expects the contribution from its non-Apple distribution divisions to increase from 10 per cent of ebitda in 2006 to more than 60 per cent this year.
