Wellington Drive ups orders

Wednesday 21st July 2010 1 Comment

Wellington Drive Technologies, the manufacturer and marketer of highly efficient electric motors, has orders well above sales for the first time since 1998.

However, the North Shore-based company, which makes its products in Asia, has hit some electronic component supply bottlenecks that limited its sales in the first half of the year, and may constrain sales in the second half, it said in a presentation to investors.

The company is ramping up production of its brushless, direct current, electronically commutated electric motors used in commercial refrigeration and ventilation segments, to over 600,000 a year. In its late June annual general meeting, the company said it could be on track to make a profit in the near future.

Company executive Steve Hodgson said the global recession meant supply for many components was cut back and that with the recovery, delivery times have been pushed out.

“It also means we have some other increased costs such as air freighting to keep customers supplied,” he said. “The second half of the year will depend on final demand levels, but Wellington has now secured supply to be able to meet a projected lift in customer demand.”

Part of Hodgson’s optimism is based on recently being accepted as a motor supplier to Coca-Cola Co. dealerships and bottle cooling fridges. As a ‘beacon’ customer, the fact that the world’s largest beverage maker is satisfied with Wellington’s more efficient motors is perceived as an endorsement by other fridge manufacturers.

Mexico and Latin America are presently Wellington’s largest markets, and “Coca Cola’s move to mandate high-efficiency coolers in the Mexican market will see flow-on demand spreading throughout South and Central America,” Hodgson said.

American distributor AO Smith’s endorsement of Wellington’s products, and particularly its access to the growing U.S. retrofit market will be beneficial too, especially as retrofitting is less price sensitive than the original equipment manufacturing market that Wellington has so far targeted.

Wellington has also partnered with European ventilation business Ziehl-Abegg, which while it will have lower gross margins than going alone means the New Zealand company doesn’t have to set up a sales/distribution infrastructure for that market. Hodgson said that while the market is positively aligned to Wellington’s motors, component availability is limiting sales and there are significant order backlogs going into the second half of the year.

He said the declining operating loss will help as Wellington’s directors continue to take the company to profitability without further capital raising while pursuing its strong global business model.

Wellington is well positioned for companies’ switch to electronic motors, and that as a “clean tech” entity, its sales demand will be driven by the economic and regulatory imperative for energy efficiency.

“We’re NZ derived intellectual property embodied in high technology electronic products,” Hodgson said. “We’re manufactured via a low-cost Asian supply chain for delivery to rapidly expanding markets in both developed and emerging countries.”

Businesswire.co.nz

Comments from our readers

On 21 July 2010 at 4:41 pm Norman said:

All the companies that I have invested in over the years that have proved succussefull have always been taken over just when they have become profitable. Hopefully this one will not follow.