Managing director Ross Green says customers tend to gain confidence when they see somebody else going in "big time". Photo / Kenny Rodger
Electronic motor maker Wellington Drive Technologies expects to announce more deals similar to an American order that will roughly double the company's revenue.
The Auckland-based company last month won its single biggest order for 400,000 electricity-saving motors from a North American commercial refrigeration manufacturer.
Managing director Ross Green
said the order would roughly double production and revenue at the NZX-listed business. In the year ending June the company posted revenue of $10.5 million but lost $6.3 million.
"You can make [the company] profitable in a few weeks if you wanted to, given its current revenues, but the thing is it's getting it to be profitable while still expanding massively on an international scale the way we do," Green said.
Wellington Drive's directors said the company expected to be profitable during the second half of the 2008 calendar year, with substantial prospects for profit growth.
Shares closed down 2c on Friday at 35c - compared to 32c before news of the American order.
Delivery of the order would be spread over a year and was expected to start in January.
"It's not by any means a one-off," Green said. "What they're doing, after several years work by our guys, they're moving us over into their programme and we'll stay there.
"The advice we have from the customer is that the volume it's likely to stabilise at is probably nearly twice as much as they've ordered at the moment ... on an annual basis." The company's electronic motors are more expensive than conventional alternatives but can reduce weight by about three-quarters and cut electricity consumption to less than one-third. Further potential orders of a similar size were at earlier stages of development and Green anticipated making announcements during the next year.
"What we've seen in the past, and it'll probably happen again this time, is that customers tend to gain confidence when they see somebody else going in big time."
Following the American order the company's production levels would be closer to capacity, enabling cost improvement. "The sort of volumes we're putting through are really starting to be pretty interesting for a lot of the sub-contractors we work with up in Asia and that allows some good improvements in pricing." Additional capacity would be added as required.
Wellington Drive employs 72 people, including about 50 staff based at its Auckland design and first-off manufacturing operation, with major work contracted to factories in China and Malaysia. The company has offices in Singapore, US, Mexico, Italy, Netherlands, Britain and Turkey.
