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VINZ ducks earnings guidance because of new emission rules on used imports

Friday 4th November 2011

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Vehicle Inspection NZ, which has a government contract to certify vehicles including used imports, says changes to rules on auto emissions will slash the volume of older autos bought overseas, making it too hard to forecast second-half profit.

VINZ, which trades on the Unlisted platform, had revenue of $5.89 million in the year ended Sept. 30, up 1.3 percent from a year earlier. Profit rose about 13 percent to $306,634.

From Jan. 1, new, tighter rules will apply to emissions from used imports, which come mainly from Japan. The change applies the Japan 2005 emission standards, meaning older cars typically won’t make the grade.

The lobby group for used imports, the Imported Motor Vehicle Association, says the annual volume brought into the country could halve to 45,000 units a year.

The emission rule makes the outlook “difficult to predict,” said VINZ chairman Kenneth Worsley, in the first-half report. “The first three months of 2012 are likely to be “particularly challenging.”

Worsley said trading would also be damped by the “fragility” of the New Zealand and the global economy. “Pressure on margins is likely to continue.”

In the six months ended Sept. 30 47,672 used vehicles were imported into New Zealand, little changed from the 47,313 that arrived in the same period a year earlier.

To broaden its business, VINZ rolled out a network of testing stations, competing for a share of the warrant of fitness and certification market. This has provided “more consistent results” for the company though it is had to absorb rising labour costs that couldn’t be passed on to customers in a competitive market.

VINZ’s Unlisted shares last traded unchanged at $1.50, giving the company a market value of $3.75 million. It has 2.5 million shares on issue.


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