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Sealegs posts wider first half loss as price pressure crimps margins

Monday 25th November 2013

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Sealegs Corp posted a wider first-half loss as lower prices for its amphibious boats crimped margins.

The Auckland-based company posted a loss of $604,000 for the six months ended Sept. 30, compared with a loss of $134,000 in the year earlier period. Sales rose 10 percent to $8.4 million.

"In spite of increased sales, pricing pressure in overseas markets resulted in reduced gross margin and a reduced net income," chairman Eric Series said in a statement. The gross margin slipped to 24.6 percent from 27.9 percent.

Sealegs is selling into new overseas markets, developing new technologies and building a broader market through licensing its technology. The company is in talks with two international boat builders for the rights to use its amphibious technology which it expects will contribute to higher-margin earnings in future years. It increased its license income in the latest period from collaborating with other boat builders in New Zealand, it said today.

The company is mulling outsourcing the manufacture of an entry level Sealegs craft to leverage production efficiencies and enable it to penetrate untapped markets. The launch of a larger, higher value Sealegs craft helped maintain its average unit sales price in the latest period, it said.

Sealegs isn't paying a dividend for the latest period.

Shares in the company slid 9.5 percent to 18.1 cents, and have gained 25 percent this year.

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