Wellington Drive first-half sales beat expectations on weaker kiwi

Wednesday 22nd July 2015

Wellington Drive Technologies, the unprofitable maker of energy efficient motors, lifted first half sales 28 percent, beating guidance, as the company benefited from the recent slump in the kiwi dollar against the greenback.

The Auckland based company said sales were $13.5 million in the six months ended June 30, ahead of the $12 million to $13 million range it forecast, and up from $10.6 million a year earlier. Earnings before interest, tax, depreciation and amortisation was at breakeven, ahead of the predicted Ebitda loss of less than $500,000, and an improvement on an Ebitda loss of $2 million a year earlier. The kiwi dollar has dropped 15 percent against the greenback this year, and was recently trading at 66.23 US cents.

"Our supply chain and cost performance has never been better, and we are certainly getting a boost from the benefits of a more competitive New Zealand dollar exchange rate assisting manufacturing and technology exporters," chief executive Greg Allen said in a statement. "The team continues to focus on improving supply chain performance and new product sales."

In March, the company said it could break even in 2015, depending on the Latin American market, where sales were hit by customer destocking due to lower demand, a drop off from its largest customer, Argentine foreign exchange restrictions, a slower technology transition in Brazil and the impact of the Mexican 'sugar tax'.

Wellington Drive today said second half customer demand is typically slower than the first half, though ordering patterns gave it a "higher level of confidence, particularly in some Latin American countries that market demand is improving."

The company expects to release its first half results on Aug. 25, and will provide annual earnings guidance then.

Wellington Drive shares were unchanged at 4.2 cents, and have slumped 29 percent this year.

BusinessDesk.co.nz

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