Eroad turns to first-half profit from year-earlier loss

See also: Eroad takes a knock in Oregon, but on-track for full-year

Logistics and fleet management software and hardware developer ERoad [NZX: ERD] turned to a first-half profit from a loss a year earlier as gains in Australia and New Zealand made up for slower growth in North America.

The profit was $611,000, or 1.02c a share, in the six months ended September 30, from a loss of $1.9 million, or 3.84c, a year earlier. Revenue rose 55% to $12.2 million.

ERoad affirmed its annual guidance for profit of $500,000 and revenue of $26.5 million, after lowering its estimates in September as an acceleration of its US expansion hurt short-term sales and added costs.

The volume of distance recorder units contracted to ERoad customers increased 58% to 31,298 from the year earlier period. Total contracted units in North America rose more than 300% to 3158, and in Australia and New Zealand increased by 47% to 28,140, the company says.

The company expects its Oregon-based North American business to grow, once new federal regulations on electronic logging devices are announced chief executive Steven Newman says.

The company sees broader opportunity in the North American market coming from new regulation and an international fuel tax agreement which covers 2.9 million vehicles across the US and Canada, and requires accurate reporting of mileage and fuel consumption, by state, to calculate fuel tax.

The company has developed an indirect sales channel in an attempt to target larger networks serving transport fleets.

"This enables us to address the 4.5 million vehicles subject to one or both of these regulations," Mr Newman says. "This is a substantial opportunity over and above Oregon weight-mile tax services."

Mr Newman says while the North American business hasn't grown as quickly as the company would have liked, its sales were 90% ahead of New Zealand sales at the equivalent point of market entry.

ERoad is now collecting 31% of New Zealand's heavy vehicle road user charges, up from 26% a year earlier and an expansion of its services is aiding its growth. Its New Zealand business is expected to continue to achieve strong sales growth in the second half of the year.

The company won't pay a first-half dividend.

ERoad expects to release an update on its progress in North America and New Zealand on January 29.

(BusinessDesk)

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