Wellington Drive widens 1H loss, warns FY earnings won't improve
By Tina Morrison
Aug. 29 (BusinessDesk) - Wellington Drive Technologies, the unprofitable manufacturer of energy efficient motors, widened its first half loss and said full year earnings won't improve as sales slump in Latin America, its largest market.
The company posted a loss of $1.99 million, or 1.58 cents per share, in the six months to June 30, from a loss of $1.22 million, or 1.87 cents, in the year earlier period, the Auckland-based company said in a statement. Revenue fell 35 percent to $10.6 million.
Wellington Drive said first half sales in the Americas, its largest market, slumped 45 percent to $6.6 million as weak demand in Latin America prompted increased rivalry and pushed down prices. The weak demand in the region is expected to continue through the rest of 2014, it said today.
"We experienced strong competitive pressure in the Latin American region, as competitors fight for a smaller available market by adopting aggressive pricing and commercial offers to take share and win new projects. This has result in the company losing some share with two customers in that region," the company said. "We are adjusting guidance to now expect 2014 revenues to be lower than 2013 with the loss before interest and tax remaining at similar levels."
The latest forecast is a further downgrade from the company's expectations in June when it said it expected revenue to be in line with 2013's $27.4 million level, compared with its previous forecast for 2014 annual revenue of $30 million to $35 million. In June, the company was forecasting its annual loss and Ebitda to improve from 2013.
Wellington Drive said it is cutting costs, diversifying its customer base and developing new products to counter the downturn in revenue and is confident it will significantly improve its 2015 results.
"Current forecasts indicate that cash resources are adequate to fund the business in the medium term," it said. The company's 2013 annual accounts were tagged by auditor PwC over forecast cash flows. Wellington Drive had cash and cash equivalents of $4.85 million at June 30.
Shares in the company last traded at 11 cents and have declined 54 percent so far this year, the second-worst performer on the NZX All Index.