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ERoad sales growth slows in first quarter as buyers delay purchases

Tuesday 10th July 2018

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ERoad registered slower first-quarter growth than anticipated as prospective buyers put off their purchasing decisions across Australasia and in North America, after a period of rapid expansion in the US. 

The Auckland-based logistics and fleet management firm added 4,172, or 5 percent, total contracted units in the three months ended June 30, with sales in Australia and New Zealand up 4 percent and North America up 9 percent. That takes annualised growth to 22 percent across the group, with sales rising at a 17 percent in Australasia and 36 percent in North America. 

"The unit sales in the first quarter of FY19 has been much slower than we initially expected as many deals have been pushed out beyond the quarter," the company said in a statement. "While the annual unit sales cycle has always been seasonal, the expected delivery timeframe for units in the sales pipeline this year results in an expectation that quarterly unit sales will be much more lumpy in FY19 than prior years."

ERoad delivered a small profit of $210,000 in the 12 months ended March 31, more than doubling underlying earnings as sales of its units gained traction in the US after a strong lobbying effort to delay a compliance regime requiring the use of electronic logging devices. 

The company today said it had registered "significant interest" from North American firms who purchased other systems that didn't meet their needs and "are looking to trial or pilot replacement solutions before agreeing to make a replacement purchase". ERoad expects that will lead to increased demand later in the financial year. 

Similarly, the company said strong demand in New Zealand and Australia will likely lead to "much stronger sales in future quarters, especially Q2 and Q3, with the deferral of a number of unit deals into these quarters."

The shares last traded at $3.49 and have gained 62 percent over the past 12 months. 

(BusinessDesk)

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