ERoad says annual loss widened in 2017 as it increased investment in the US

ERoad says its annual loss widened in the 2017 financial year as a boost to investment in the US and changes to the way it amortises development costs weighed on the bottom line, even as sales continued to grow. 

The Auckland-based company said it will report a net loss of between $5.5 million and $6.5 million in the year ended March 31, up from a loss of $1.3 million a year earlier. Of that, $1.5 million was due to ERoad changing the way it amortises development costs to a straight line monthly charge from an upfront cost per unit, while the balance was due to "significant investment" in the US where the company expects to benefit from the government registration of its hardware-based electronic logging device. The accounting change will lead to a higher amortisation charge in later years. 

Earnings before interest, tax, depreciation and amortisation rose to between $6 million and $7 million from $5.7 million in 2016, with a 30 percent increase in total contracted units sold to 11,088.

"ERoad's sales pipeline for FY18 is very healthy in both the New Zealand/Australia and US markets with more than 6,168 unit commitments already received from customers to be delivered," chief financial officer Jason Dale said in a statement. "In the US, sales growth continued to be modest, as anticipated, as the business built its sales and marketing capability and engaged in extensive market research in advance of going to market with our in-cab hardware-based electronic logging device." 

The shares were unchanged at $2, with the announcement coming just before the end of the trading day. The stock has climbed 25 percent so far this year but is still some way off its initial public offering price of $3 in August 2014. 

(BusinessDesk)