Wellington Drive posts full year operating profit on soaring US sales

Wellington Drive Technologies [NZX: WDT], the maker of energy efficient motors for commercial refrigerators, has seen revenues rise by 38% in the six months to the end of June on a year earlier, driven by demand in the US and Canada ahead of the adoption of new regulatory standards next year.

Sales in the North American region rose by 119%, with strong demand for the Auckland-based company's new ECR2 motor. US dollar revenue grew 26% in the first quarter of the year and by 24% in the second quarter to a total of US$12.6million for the six months, compared to $10.1 million in 2015.

Latin American US dollar revenue rose 20%, Asia-Pacific 16% and Europe, Middle-East and Africa grew 43% after a disappointing 2015.

Gross margin increased to 22.4% from 20.7% in the same period in the prior year. Adjusted earnings before interest, taxation, depreciation and amortisation were $279,000 compared to a $608,000 loss in the same period in 2015. Positive cash flow rose to $600,000 from $500,000.

Operating costs rose to $4.2 million from $3.4 million, reflecting the lower New Zealand dollar/United States dollar exchange rate and increased staff costs to ensure the "addition of necessary skills in engineering, customer management and field service," the company said in its update to investors. It anticipates recruiting more staff in 2017.

Wellington Drive has warned it expects an ebitda loss in the third quarter of the year, with "some larger customers deferring some third quarter demand into the fourth quarter and also the first quarter of 2017." The company also acknowledged that the significant revenue growth, combined with these deferrals "is putting some pressure on short-term working capital."

"The company is currently negotiating working capital support through a debt facility and the board is confident this will be obtained."

Revenue for the full-year is expected to be up to 30% higher than 2015's $24.57 million and ebitda will be either a small loss or a modest profit.

Shares in Wellington Drive rose 9.09% to 12 cents and have risen 37.5% since the start of the year.

(BusinessDesk)

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