Wellington Drive widens annual loss, NZX's SuperLife underwrites $3m share issue
Wellington Drive Technologies, the unprofitable manufacturer of energy efficient motors, widened its annual loss as sales dropped 35 percent. It will tap investors for $3 million to fund its growth recovery plans, in a capital raise underwritten by NZX's SuperLife.
The Wellington-based company posted a loss of $4.5 million in calendar 2014, from a loss of $4 million a year earlier. Sales fell to $17.8 million, from $27.3 million the previous year, as sales in its Latin American market fell 46 percent, offsetting increases in Asia and Europe.
The company said it can return to breakeven in 2015, depending on the Latin American market, where sales were hit by customer destocking due to lower demand, a drop off from its largest customer, as well as Argentine foreign exchange restrictions, slower technology transition in Brazil and the impact of the Mexican 'sugar tax'. Revenue for January was $2.4 million, while profit before interest and tax was $227,000.
"The revenue performance in 2014 means our growth turnaround plan to bring the company to breakeven has been delayed by a year," Wellington Drive said in a statement. "Our objectives to reduce cost, diversify customer growth through new products and further improve supply chain performance remain the focus for 2015 and in the coming year we expect to return to growth with improving revenue and margin."
The energy efficient motors manufacturer ended the year with a cash balance of $1.2 million, as an inventory build impacted cash flow, it said. The company's major shareholder, SuperLife, the investment fund owned by the stock market operator, will underwrite Wellington Drive's five-for-six share issue at 3 cents per new share. That's a discount to its last traded share price of 5.2 cents.
The company will seek shareholder approval at its annual meeting for the fund manager to lift its stake above 20 percent in the capital raising, which it expects to close in April with new shares issued in May.