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Wellington Drive narrows 1H loss as turnaround plan trims costs by 30 percent

Tuesday 27th August 2013

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Wellington Drive Technologies, the unprofitable manufacturer of energy efficient motors, narrowed its first-half loss as its new strategy trimmed its costs by 30 percent.

The Auckland-based company made a net loss of $1.76 million, or 1.87 cents per share, in the six months ended June 30, from a loss of $3.29 million, or 4.89 cents, a year earlier, it said in a statement. The loss before interest, tax, depreciation and amortisation narrowed to $1.74 million from $3.72 million.

Sales declined 26 percent to $16.4 million after the manufacturer quit its ventilation production in Singapore, and gross margins improved to 17 percent from 12 percent in the same period a year earlier.

The company affirmed annual revenue guidance of between $30 million and $33 million and an EBITDA loss of less than $3 million. It still predicts a positive EBITDA result in 2014, and reported its first monthly EBITDA profit in June.

"Wellington's operating and financial performance continues to improve and the board and management are confident that all appropriate actions are underway to improve the execution engine and deliver on financial promises," the company said. "As result of this growing confidence, the focus is shifting to the actions and investments that will be necessary to return Wellington to a path of accelerated growth."

The manufacturer raised $4.4 million over the past year from new and existing investors, which it will use to fund its cost reduction and growth initiatives after years of underperformance which has seen it amass accumulated losses of $100.8 million.

Wellington Drive reported positive operating cashflow of $533,000 in the six month period, turning around an outflow of $1.48 million a year earlier.

The board didn't declare a dividend.

The shares climbed 13 percent to 13 cents in trading yesterday, and have shed 19 percent this year. That values the company at $15 million, and is more than its net tangible assets per share of 8.18 cents.

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