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Energy Mad posts wider-than-expected annual loss of $2.5 million after bulb delays crimp sales

Tuesday 28th May 2013

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Energy Mad, which has twice downgraded its 2013 earnings expectations, today posted a wider-than-expected loss of $2.5 million after design, manufacturing and production problems crimped sales.

Energy Mad, which listed in late 2011, had forecast a $4 million profit for the year ended March 31 in its prospectus. The company subsequently lowered its forecast twice, most recently in February when it predicted a loss of $1.1 million. The Christchurch-based company also posted a loss in 2012 against a forecast profit in the prospectus.

The energy efficient light bulb innovator said revenue rose 59 percent to $9.2 million in 2013, compared with a prospectus forecast of $21.3 million. Sales lagged expectations after the company failed to bring in an expected $9.8 million of revenue from halogen sales in Australia as design changes delayed production of a 12 volt ecobulb and manufacturing problems crimped sales to 10 percent of projections for a 240v ecobulb downlight.

"Despite the challenging last few years, Energy Mad is positioned to deliver on the potential that it believes attracted investors to Energy Mad," the company said in a statement.

Energy Mad expects to post a profit in the 2014 financial year on increased sales and reduced costs. More detailed guidance will come when the results are seen, it said.

The company's cost cutting programme aims to deliver $1.1 million of savings in 2014, more than its December forecast of $750,000.

Energy Mad is in talks with its Chinese joint venture factory to sell the company's 20 percent holding, which may reap it $1.7 million, while retaining preferential supply arrangements.

Shares in the company were unchanged at 38 cents, having dropped 19 percent so far this year.

In the US, Energy Mad has secured $1.5 million from 28 electric utilities to discount its light bulbs in 1,350 Walgreens stores this year, without impacting the company's margins. It expects direct mail promotions and dedicated displays in the stores to help drive sales.

Some 64 percent of main householder shoppers in the US shop at Walgreens at least once a year, according to Colmar Brunton research. Energy Mad expects to add another large US retail chain in the next 12 months, it said.

The company expects to start selling LED bulbs under its brand later this year to take advantage of subsidies from electricity utilities, low LED uptake and its retailer connections.

In Australia, the company aims to maintain its spiral ecobulb sales through 2014. Sales of the spirals more than doubled to $4.3 million in 2013, helped by a new energy efficiency scheme which started in the Australian Capital Territories this year.

The company expects to receive accreditation in the near future for its 12v ecobulb compact fluorescent lamp from the Victorian and New South Wales energy efficiency schemes, allowing it to tap a market worth $170 million.

In New Zealand, Energy Mad trimmed costs from its Direct Installation business that sells and installs ecobulb downlights and insulation in homes, helping the unit turn a profit from April. It now aims to expand the scale of the business profitably.

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