Wellington Drive to miss prospectus forecasts on refrigeration demand

Wednesday 10th June 2009

Wellington Drive Technologies, the manufacturer searching for a cornerstone investor, said sales and profit will miss its prospectus forecasts this year, reflecting lower-than-expected demand for refrigeration motors in Asia and Europe.

Revenue is forecast to be $33.7 million this year, below the $40 million estimate in the company’s January 9 prospectus, it said in a statement today.

The maker of energy-efficient motors expects to post a full-year net loss of $11.4 million, worse than the $9.7 million loss predicted in January, when the company announced a one-for-three rights issue at 10 cents apiece to raise $11.4 million.

The shares fell 3% to 16 cents and have declined from as much as 48 cents in last 2007. The prospectus estimate of $40 million revenue would have represented growth of 150%. Wellington Drive expects to trade profitably in 2010, it said.

Demand for commercial refrigeration components in Asia was “substantially lower than expected” in the first quarter, though orders have subsequently revived and are near forecast levels.

Wellington Drive cited the effects of the global financial crisis. In Europe, demand for the company’s ECR and AirMo Vent motors was also below expectations though it is confident of a rebound in the second half.

Deliveries of ventilation motors and related controls to its largest customer, JE StorkAir in the Netherlands, are “as expected,” the company said, without giving details.Gross margins in the first half of this year have been squeezed by higher-than-expected freight costs and stock provisioning and one-off costs from the closure of the company’s UK warehouse.

Wellington Drive is trimming operating costs and has cut staff as part of an ongoing review. It plans to give more details of trading at its annual meeting on June 16.

Businesswire.co.nz

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