Wellington Drive narrows loss after trimming costs, fattening margin

Wellington Drive Technologies, which makes energy efficient motors, narrowed its full-year loss after embarking on a strategic overhaul that cut costs, spending and inventory and widened its margins.

The net loss shrank to $6.3 million in calendar 2012, from a loss of $14.5 million a year earlier, the Auckland-based company says in a statement. Revenue rose 2 percent to $35.6 million.

The manufacturer's turnaround plan saw it exit ventilation production in Singapore, now outsourced to Ziehl-Abegg, and reductions in inventory, supply chain and operating costs.

Wellington Drive's gross margin jumped to 14 percent from 5 percent. Operating costs fell 28 percent to $11.7 million and inventory fell to $4.5 million from $10.9 million.

The shares last traded at 15.5 cents and have declined 16 percent in the past 12 months.

The company says its targets for 2012 are continued margin expansion and revenue growth. Revenue is forecast at between $30 million and $33 million, while the gross margin target is a 4 percent to 6 percent increase on 2012.

It is aiming for a full-year loss on an earnings before interest, tax, depreciation and amortisation basis of below $3 million, with positive ebitda for 2012.

(BusinessDesk)

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I'd hate to be an investor in this company. Burning $34 million for no sign of a profit yet. Time to find a buyer who wants the technology and sell it.

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