Wellington Drive Technologies sees profit ahead

Wellington Drive Technologies is forecasting a profit next year, the first since listing on the NZX in 2001, as its turnaround cost-cutting moves start to widen the margin on sales of its energy-efficient refrigeration motors.

The Auckland company achieved its revenue target of $11.5 million in this year's first quarter, chief executive Greg Allen told shareholders at their annual meeting.

"Quarter one 2012 was our first indication that some of our action plans are focused on the right things."

Last year the company announced it was embarking on various capital-raising initiatives to keep the business afloat as it struggled to achieve profitability. It started a restructuring programme designed to reduce costs and improve cash flow.

"This turnaround plan drives a more disciplined approach to growth in our core refrigeration market and in particular a shift from building scale to a sharp focus on profitable growth from selected customers," said chairman Tony Nowell.

Wellington Drive expects its plan to deliver total revenue of $40 million this year, up from $35 million last year.

It also signalled a gross margin of 17 per cent by the end of the fourth quarter.

In February, the company posted a net loss of $14.7 million for calendar 2011, as against $14.8 million a year earlier. Operating costs increased to $13.3 million from $12.6 million.

Wellington Drive shares have shed 19 per cent this year, closing yesterday on 18c.

- BusinessDesk

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