UPDATE: ERoad shares jump to year-high as second quarter sales break record
(Recasts lede on share price, adds broker comment, updates shares in 3rd paragraph)
By Paul McBeth
Oct. 5 (BusinessDesk) - ERoad shares climbed to their highest level in more than a year after the company continued to gain traction in the US ahead of the December deadline for logistics firms to adopt and use electronic logging devices.
The Auckland-based company sold 2,313 units in the US in the three months ended Sept. 30, taking its total units in the US to 9,736. In its established Australian and New Zealand markets sales rose 11 percent to 49,802. The 7,086 units sold in the quarter was a new record for the company in both markets, and chief executive Steve Newman has previously said the 2018 financial year will likely post its biggest ever sales.
The shares climbed 17 percent to $2.65, adding to the 47 percent gain so far this year.
"They're on the road to recovery with that positive news," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "It's been pretty volatile over a number of years - they've had trouble and disappointment, but maybe investors think this is the turning point for the company."
North American sales lagged behind expectations in the 2017 year as US buyers put off buying decisions ahead of the new compliance regime as lobbyists tried unsuccessfully to delay the introduction.
With the opposition out of the way, ERoad has enjoyed record US sales in each of the first two quarters of the 2018 year, with sales growth tracking at a annualised rate of 119 percent. That compares to a rate of 37 percent in the existing Australasian markets.
"We expect that the traditional Christmas/New Year break in the ANZ market will lead to a slowdown in unit sales from the Q2 record levels," Newman said in a statement. "However, we expect the US market to continue to reflect the demand for ELD solutions for the market adoption deadline of 18 December 2017."
The company expects to surpass 50,000 units sold in Australia and New Zealand and 10,000 units in the US in the coming week, it said.