WDT
10/06/2014 10:23
FORECAST
REL: 1023 HRS Wellington Drive Technologies Limited
FORECAST: WDT: Wellington Trading Update and 2014 First Quarter Results
In our January trading update and Annual Report we highlighted weakness in
demand from the Latin America market, partly due to the impact of a
soft-drink sugar tax imposed in Mexico. Latin American customers are now
signalling further demand reductions for the second half of 2014. As a result
it is likely that the company will not achieve its previously disclosed FY
2014 revenue of $30m-$35m and EBITDA loss of under $2m. Revenue is now
expected to be in line with the 2013 result, with Loss for the Year and
EBITDA improving versus FY 2013.
The Wellington team is focused on broadening Wellington's customer base and
product roadmap to accelerate growth opportunities, and have updated 2014
priorities to include the launch of the new advanced motor product that
supports both Supermarket and Bottle Cooler customers.
CEO, Greg Allen commented, "Our growth actions remain unchanged. We are
focused on diversifying revenues by winning new customers globally, our
product development programmes are tracking very well and our supply chain
transition is running to plan. The forecast demand weakness from our Latin
America market is a concern, but somewhat understandable as a result of the
Mexico sugar tax and resulting stronger competitive environment. In the
meantime our team is working closely with the customers concerned to recover
volume where possible, and is further reviewing opportunities to reduce
costs."
Q1 Result:
The company's Q1 revenue result was $6.2M. Gross margin, EBITDA and Loss
performance was better than expected at 16.6%, -$1.1m and -$1.2m
respectively, demonstrating the improvements and predictability in cost
structure. Cash on hand at the end of Q1 was $1.5m and has been further
improved by the recent convertible share issue, which will raise $5m, subject
to shareholder approval at the company's Annual General Meeting on June 16.
The Wellington team noted strength in its European and Asian markets, both of
which are tracking higher than 2013. It is also encouraged by positive
customer responses to the development of new Advanced Motor and Smart
Controller products. The supply chain transition to East West is tracking to
plan and gross margin improvements as a result of this transition are
expected in Q4 2014.
* EBITDA (i.e. earnings before interest, taxation, depreciation and
amortisation is a non-GAAP earnings figure that equity analysts tend to focus
on for comparable performance analysis. The Company considers that it is a
useful financial indicator because it avoids the distortions caused by
differences in amortisation and impairment policies. EBITDA for Q1 is
calculated as the loss before interest and taxation of $1.192 million less
depreciation and amortisation of $0.106 million. There was no impairment of
non-current assets in the period.
_________________________________________________________________
Contact:
Greg Allen
Chief Executive Officer
Mobile: +64 27 777-9025
Howard Milliner
Chief Financial Officer
Mobile: +64 27 587-0455
End CA:00251390 For:WDT Type:FORECAST Time:2014-06-10 10:23:05
