Eroad cuts 2016 guidance to loss of $1.3M-$1.6M vs IPO forecast for profit

Monday 16th May 2016

Eroad, the logistics and fleet management company, cut its 2016 earnings guidance for the second time to a loss in the range of $1.3 million to $1.6 million compared to a prospectus forecast of a $5.5 million profit.

Earlier guidance released to the market on Sept. 28 indicated a profit of about $500,000 in the 2016 financial year, the Auckland-based company said in a statement.

Eroad, which was the first company to roll out a national GPS-based road user system, raised $40 million in an IPO in August 2014. Its shares fell 1.1 percent to $2.60 today, below its $3 initial public offering price.

Chief executive Steve Newman said the company had to expense more research and development costs than was forecast which impacted on earnings. In addition, earnings were hurt by unrealised foreign exchange movements since the half year and other unforecast one-off costs.

Its full year preliminary results are due to be announced on May 26.

Newman said the New Zealand business has been performing strongly and group revenue is in line with its September guidance of $26.5 million, which is down from the $34 million forecast in its IPO prospectus.

In March, the California Department of Transportation selected Eroad as its heavy vehicle technology provider for the California Road Charge Pilot, the largest in the US to date, which is scheduled to run for nine months until July. It’s investigating road charging options to possibly replace California’s fuel tax.

Eroad sells its weight-mile tax solution in Oregon, Washington and Idaho and its electronic road user charging in New Zealand.

In a market update earlier this year, Newman, who has been based in Oregon since October last year, said Eroad was continuing to deliver unit growth of over 58 percent year on year and the New Zealand and North American markets presented sizeable and on-going growth opportunities for the business.

BusinessDesk.co.nz

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