Solid $0.5 Million Profit Achieved Despite Economic Slowdown, Rising Australian Dollar PERTH, Australia, Aug. 20
PERTH, Australia, Aug. 20 /PRNewswire-FirstCall/ -- International clean
energy technology group, Orbital Corporation Ltd (ASX: OEC - "Orbital"), has
confirmed plans to continue to expand in aligned business sectors --
particularly the rapidly growing Alternative Fuels market -- after today
announcing a $0.5 million net annual profit after tax. The result, which was
in line with the Company's forecast of a second half and full year 2008
financial year profit, would have been above last year's $1.3 million net
profit but for the stronger Australian dollar.
Orbital said today that its bottom line earnings were reduced by
approximately $1.2 million due to the rising Australian currency which
negatively impacted earnings generated from its US manufacturing joint
venture, Synerject, engineering revenue and royalty income.
The profit result was achieved on total revenue of $14.9 million (2007:
$15.2 million), with the main contributors being a slightly decreased
contribution of $11.7 million from engineering services and increased
contribution of $2.7 million from licence and royalty income.
"Despite a generally tough operating environment, we are pleased to have
achieved a profit for the year," said Orbital's newly appointed CEO, Mr Terry
Stinson. "Importantly, we are in a strong financial position with cash on hand
of $8.8 million at year-end, which gives us the balance sheet strength to
pursue our growth objectives."
"We have achieved several important strategic goals during the year,
including our expansion into the alternative fuels business through the
acquisition of Sydney-based Orbital Gas Products," Mr Stinson commented.
"These growth initiatives will add value in future years and position the
Company extremely well in the current environment."
"The acquisition of OGP marks the first phase of our plans to grow into
gaseous fuel technology and develop additional commercial business
opportunities," he said.
"These and other developments in the Liquid Natural Gas (LNG) market
provide exciting new growth avenues for Orbital in the current market
environment, where demand for alternative fuels technology is rapidly
increasing," Mr Stinson added. "We are focusing on implementing our strategic
investment initiatives and targeting continued profitability year on year."
Synerject
Notwithstanding the slowdown in the US marine market, Synerject LLC
generated a 2% increase in revenue to US$81 million during the 2008 financial
year. Synerject generated a US$2.6 million operating cash flow, paying its
first dividend of US$840,000 to Orbital, and remains in a strong financial
position with a gearing ratio of 18%.
Orbital CEO Terry Stinson said: "We are committed to providing Synerject
with technical and financial support and believe we will be seeing much
greater reward for our efforts in the not too distant future. Orbital's
investments in Chinese infrastructure have begun to pay dividends, with sales
in China targeted to increase by US$10 million to US$15 million next financial
year.
"We are laying the foundations to ensure that Synerject is well positioned
to win sales when Chinese emissions legislation is introduced," he added.
Engineering Services
Engineering Services generated revenue of $11.7 million for the full year,
slightly lower than the previous year, reflecting the challenges of the
downturn in the general market and the stronger Australian dollar.
The launch of the new FlexDI(TM) 'One Engine - Any Fuel' system further
cemented the Company's diversified business direction, expanding Orbital's
Direct injection systems to operate with a wide range of both liquid and
gaseous fuels, generating a significant response from both China and Europe.
"With the increasing awareness of global warming, rising fuel costs and
depleting availability of crude oil, the call for alternative fuels and energy
and emission management has never been stronger," said Mr Stinson. "Orbital's
engineering services are well positioned to provide key technology services in
forthcoming years," he continued.
Orbital's commitment to research and development has resulted in 20 new
patent applications being granted. Four of these have been in the last 12
months, contributing to and extending the life of current and future royalty
streams.
Licensing and Royalties
The overall number of Orbital DI engines earning royalties remained steady
during 2008 compared to the previous year. The 2008 financial year saw two new
products using Orbital's technologies introduced, including the first ever 4
stroke engine application the multi-fuel Polaris MV800 ATV.
"Licensing and Royalty revenue increased by 17% to $2.7 million compared
to the previous financial year. Despite the steady royalty volumes, the
contribution from this sector fell by $0.3 million due to the impact of the
weakening US Dollar but this was offset by increased licence fees," said Mr
Stinson.
"Since product introduction in 1996, over 1.6 million air
injectors/cylinders have been commercially sold, reducing greenhouse gas
emissions and improving fuel economy," he continued. "Orbital's commitment to
identify and secure alternative fuel opportunities and continued expansion
into aligned businesses will ensure that the Company continues to grow as a
profitable international developer of innovative technical solutions for a
cleaner world."
New Developments and Growth
Orbital announced several strategic developments during the year to
commence its expansion into the Alternate Fuels Market.
"We have unveiled a number of new initiatives aimed at furthering the
Company's expansion into the alternative fuels business, including the
formation of Orbital Gas Products, (formally Boral Alternative Fuel Systems),
a tier 1 supplier of LPG systems to the Ford Motor Corporation and to the
aftermarket operators," Mr Stinson said.
"In addition, our growth in this area received a further boost with the
Federal Government announcing funding for the installation at our facilities
in Perth of a heavy duty engine testing facility capable of operating engines
on natural gas, LPG and biodiesel as well as diesel and gasoline."
About Orbital
Orbital is an international developer of innovative technical solutions
for a cleaner world. Orbital provides innovation, design, product development
and operational improvement services to the world's producers, suppliers,
regulators and end users of engines and engine management systems for
application in motorcycles, marine and recreational vehicles, automobiles and
trucks. Orbital's principal operations in Perth, Western Australia, provide a
world class facility with capabilities in design, manufacturing, development
and testing of engines and engine management systems. Headquartered in Perth,
Western Australia, Orbital stock is traded on the Australian Stock Exchange
(OEC) and the OTC Bulletin Board (OTC Bulletin Board: OBTLY).
Forward Looking Statements
This release includes forward-looking statements that involve risks and
uncertainties. These forward-looking statements are based upon management's
expectations and beliefs concerning future events. Forward-looking statements
are necessarily subject to risks, uncertainties and other factors, many of
which are outside the control of the Company, that could cause actual results
to differ materially from such statements. Actual results and events may
differ significantly from those projected in the forward-looking statements as
a result of a number of factors including, but not limited to, those detailed
from time to time in the Company's Form 20-F filings with the US Securities
and Exchange Commission. Orbital makes no undertaking to subsequently update
or revise the forward-looking statements made in this release to reflect
events or circumstances after the date of this release.
SOURCE Orbital Corporation Limited
