Eroad posts $1.3 million annual loss, foresees 2017 growth

By Sophie Boot

May 26 (BusinessDesk) - Eroad, the logistics and fleet management company, posted an annual loss within its earlier guidance which it said was the result of more investment and US customer uncertainty.

The Auckland-based company said its net loss was $1.3 million in the year ended March 31, compared to a prospectus forecast of a $5.5 million profit, but within its guidance issued last Monday of a loss between $1.3 million and $1.6 million. Earnings before interest, tax, amortisation and depreciation and costs of listing gained 12.9 percent to $5.7 million on a 49 percent lift in revenue to $26.2 million. Earlier guidance released to the market on Sept. 28 and affirmed in November had predicted a profit of $500,000 and revenue of $26.5 million in the 2016 financial year.

Eroad, which was the first company to roll out a national GPS-based road user system, raised $40 million from investors when it listed on the NZX in August 2014 at a price of $3 a share. The shares reached a high of $4.28 in November 2014 and were recently up 1.6 percent to $2.50.

Chief executive Steven Newman said the loss was "the result of foreign currency movements, higher research and development investment expensed rather than capitalised, and higher investment in the US business as the company prepares to meet the US-wide electronic logging device (ELD) opportunity."

Sales expectations in the United States, which Eroad sees as its growth market, were adjusted due to customer uncertainty, Newman said. Operators were delaying purchase decisions as they wanted to be sure the system they bought would meet all their needs including new ELD requirements, and that uncertainty was impacting Eroad's US sales numbers in the short term.

Newman said that in 2017 Eroad would "continue to execute its growth plans while at the same time remaining cost conscious as the business grows to ensure sustainable growth." The company sees demand growing in New Zealand as health and safety requirements push companies to improve their monitoring, and is focused on its growth in North America, he said.

“In the US we look forward to completing the market execution strategy and re-alignment of the business to address the nationwide ELD opportunity," Newman said. "This will include the recruitment of a senior, US-based leader for the business, and the development of Eroad's indirect sales channel. We look forward to launching our compliant ELD solution, and being among the first movers in this very significant market space."

No dividend was declared.

(BusinessDesk)

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