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Eroad eyes partnerships in North America to fast-track growth

Friday 3rd August 2018

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Eroad wants to accelerate growth in North American by partnering with other telematics firms which could be rolled out to the wider business. 

The Auckland-based logistics and fleet management firm found its strategic review of the North American unit, which started in Nov. 2017, had been ill-timed as rivals and other telematics companies operating in adjacent markets were working on their own products, chief executive Steven Newman told shareholders at yesterday's annual meeting. Still, the First NZ Capital-led programme found there is an opportunity for Eroad to sell more units with a wider distribution channel and that its own product was regarded highly. 

"What we have determined is that working with adjacent businesses offers the most opportunity to accelerate our growth strategy," Newman said in speech notes published on the stock exchange. "We have worked through our options and are working with substantial opportunities that we believe will benefit not just the North American business but also potentially the wider business."

Eroad registered slower first-quarter sales growth than anticipated after a rapid period of expansion in the US last financial year, but remained upbeat about its prospects, putting down the sluggishness to delayed purchasing decisions. 

The shares rose 2.1 percent to $3.40, having dropped 7 percent so far this year. 

Newman said yesterday he expects solid growth to continue in the home market of New Zealand as health and safety requirements drive demand for telematics among light commercial fleets. Australia is seen heading in the same direction with new legislation set to come in 2019. 

Eroad will expand its core product range beyond mileage based tolling and telematics, to capture more data which can then be used to provide insights for its customers such as managing health and safety on roads, ensuring vehicles are fit for use and measuring driver fatigue, he said. 

Newman cited the company's role in reducing speeding in New Zealand and identifying risks at sharp corners on the country's roads, saying "we can help in the Transport Authority run experiments by providing before‐and‐after behaviour analysis," meaning the government agency can improve signage rather than embarking on more expensive road upgrades. 

That fits into the government's new transport strategy, which has signalled greater investment in safety improvements for the road network and will develop a specific road safety strategy that may expand the Crown's current research, data and monitoring. 


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