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Eroad posts $1.3 million annual loss

NZ NewswireNZ Newswire 26/05/2016 Sophie Boot

Eroad, the logistics and fleet management company, posted an annual loss within its earlier guidance which it said was the result of more investment and US customer uncertainty.

The Auckland-based company said its net loss was $1.3 million in the year ended March 31, compared to a prospectus forecast of a $5.5m profit, but within its guidance issued last Monday of a loss between $1.3m and $1.6m.

Earnings before interest, tax, amortisation and depreciation and costs of listing gained 12.9 per cent to $5.7m on a 49 per cent lift in revenue to $26.2m.

Earlier guidance released to the market on Sept. 28 and affirmed in November had predicted a profit of $500,000 and revenue of $26.5m in the 2016 financial year.

Eroad, which was the first company to roll out a national GPS-based road user system, raised $40m from investors when it listed on the NZX in August 2014 at a price of $3 a share.

The shares reached a high of $4.28 in November 2014 and were recently up 1.6 per cent to $2.50.

Chief executive Steven Newman said the loss was "the result of foreign currency movements, higher research and development investment expensed rather than capitalised, and higher investment in the US business as the company prepares to meet the US-wide electronic logging device (ELD) opportunity."

Sales expectations in the United States, which Eroad sees as its growth market, were adjusted due to customer uncertainty, Newman said.

Newman said that in 2017 Eroad would "continue to execute its growth plans while at the same time remaining cost conscious as the business grows to ensure sustainable growth."

The company sees demand growing in New Zealand as health and safety requirements push companies to improve their monitoring, and is focused on its growth in North America, he said.

"In the US we look forward to completing the market execution strategy and re-alignment of the business to address the nationwide ELD opportunity," Newman said.

No dividend was declared.

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