orbital commercial update and forecast

Note two new products, one from Suzuki, a Jap cycle maker, and the bigger 100cc bike from Kimco, launched this month!!!!!!!!!!



Subject: ORBITAL COMMERCIAL UPDATE AND FORECAST


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ASX AND MEDIA RELEASE: 6 December 2004 ASX Code: OEC
FOR IMMEDIATE RELEASE OTCBB Code: OBTLY
ORBITAL COMMERCIAL UPDATE AND FORECAST
______________________________________________________________
PERTH, AUSTRALIA: Orbital Corporation Limited today announced that it
expected to return to profit in the six months ending June 2005
following an
improved performance across most of its businesses. The improvement
is
underpinned by recent contracts in powertrain consulting and a range
of actual or
planned product launches in the northern hemisphere by its licensees.
Product Releases
Orbital confirmed the release of the Suzuki Katana 50cc direct
injection scooter in
Europe. This is the first Japanese branded product utilising
Orbital's patented
combustion technology, OCP to be released to the market. The
scooter's 50cc DI
engine is supplied under licence by Aprilia.
Kymco, the Taiwanese motorcycle manufacturer, has also advised that
they will
commence their initial release to selected dealers of their 100cc
direct injection
scooter, from December 18th 2004. This is Kymco's first product
release
incorporating OCP and will be the largest displacement OCP scooter
engine in the
market, providing additional consumer choice.
Significantly, Piaggio/Aprilia have also advised of model upgrades
or new models
recently introduced to their dealers for the new model year,
including the Gilera
Race Replica 50cc scooter and the new NRG Purejet under the Piaggio
brand and
the Sr 50 R Factory, replacing the popular SR 50, from Aprilia.
Piaggio recently
announced the acquisition of Aprilia and Orbital is encouraged by
the new
management's commitment to the product class and technology
demonstrated by
these introductions.
Orbital's technology has recently been further developed for the
marine sector, to
allow the use of alternate heavy fuels in addition to gasoline
capability. Two models
have recently become commercially available including the Mercury
Heavy Fuel
Outboard, based on the Optimax Racing 250XS, capable of running on
both
gasoline and JP5 and a 50hp engine supplied by E.P.Barrus (UK)
capable of
running on F44, F34, JP8 and diesel as well as conventional
gasoline. Barrus is the
largest UK distributor for Mercury Marine and represents a number of
other
outboard engine OEMs. Their product is based on the Tohatsu 50hp
engine. These
engines are expected to find markets beyond their initial
development application
with a number of commercial users, including rescue operators who
favour the use
of less flammable fuels. Additionally, Tohatsu have advised of
their intention to extend their range of OCP
based DI outboard engines in the 2005 model year.
Powertrain Engineering Consulting
Since July 1st Orbital has secured over $6.5 million of engineering
contracts. The
contracts cover projects including:
· A complete automotive calibration/emissions upgrade
· A direct injection management system for 4-stroke two wheeler
applications
· Engine calibration and testing
· A number of OCP application programs
· Government vehicle testing programs.
These contracts together with other anticipated programs are
expected to produce
a solid second half for F2005.
Research and Development
Considerable scope appears to exist for OCP to be applied to
multiple fuel engines,
including heavy fuels and bio fuels, as evidenced by the recent
commercial
introduction of the technology on two marine models. Additionally,
there is
extended interest in the development of gaseous direct injection
systems including
for hydrogen and compressed natural gas (CNG), with obvious
greenhouse
emission advantages and with improved performance liquefied
petroleum gas
(LPG) engines.
Orbital is also working on a second generation of OCP DI, to provide
a reduced cost
system for single cylinder applications.
Outlook
At the Company's AGM in late October, Orbital advised of an
operating loss for the
six months to 31 December 2004, currently forecasted in the range of
$1.5 to $1.9
million. The loss has resulted from a combination of poor volumes in
both the
European scooter market and in the personal watercraft market as
well as a delay
in powertrain engineering orders which was not corrected until the
end of the first
quarter. The improvement in powertrain engineering orders, referred
to earlier, is
expected to improve revenue in the second half of F2005. This,
together with
Synerject's typically stronger second half result and an upturn in
royalties from both
improved market conditions and new model availability, is expected
to result in
Orbital returning to profit in the second half.
Orbital's most significant new licensee, Bajaj Auto in India, has
advised that it is still
on plan to introduce its new OCP autorickshaw by December 2005. This
introduction, along with other anticipated model introductions,
suggests that the soft
conditions prevalent in the first half of F2005 should not be
expected to be carried
into F2006. The Bajaj program is well advanced and to date has met
all
management milestones.