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OEC 58.0¢

oec equipped products to increase to 32-35

  1. snuff

    6,931 posts.
    Not a lot of interest in OEC at the moment but it is worth keeping an eye on. The following article sums it up and Mr Cook, the CEO, says that by the end of 2003 there should be 32-35 OEC equipped products on the market, up from 24 at present. Although in this financial year ther will in all likelihood be a loss, I am expecting a profit next year.

    I hold lots at a loss so read the red stuff.

    Regards

    Desmond

    Informative and nicely done
    Turnaround potential good news for Orbital
    23-Jan-03
    By Mark Beyer



    ORBITAL Engine Corporation has achieved two major breakthroughs this
    month, removing dark clouds hanging over the company's future.

    The good news for Orbital shareholders is that the company, under new
    chief executive Peter Cook, has secured its medium-term future.

    The bad news is that Orbital is coming off a very low base, with
    bottom-line profits remaining elusive.

    Hartleys analyst Steven Piotrowski put Orbital's recent history in
    stark context by stating that: "If Peter Cook hadn't come in and made
    the changes that he did, there is a very real prospect the company
    would have gone under.

    "It has now bottomed and is a potential turnaround story. That is the
    appeal."

    Paterson Ord Minnett analyst Robert Gee holds a similar view.

    "Having removed the immediate financial risk to the company, Orbital
    appears now to be well placed to continue working on automotive
    deals," Mr Gee said.

    "Delays may continue but Orbital should still be around to see the
    technology commercialised if the automotive manufacturers eventually
    decide to adopt it."

    The past 12 months have been challenging for Orbital, with extensive
    cost cutting and restructuring.

    A critical achievement was the restructuring and refinancing of its
    Synerject manufacturing joint venture, owned 50:50 with Siemens
    Automotive.

    The refinancing included Orbital converting an outstanding $10.2
    million loan to Synerject into equity.

    It also involved Orbital vending its profitable marine and recreation
    systems business into Synerject, and Siemens vending in a non-
    automotive systems business.

    This will dramatically change the shape of Orbital's annual accounts,
    with sales revenue sharply lower.

    However, Mr Cook said Orbital's bottom-line impact would be
    unaffected since it would benefit from cost reductions and in-creased
    earnings from the larger Synerject business.

    The second major achievement this month was the New York Stock
    Exchange's (NYSE) decision to allow Orbital shares to continue
    trading on Wall Street.

    This was despite Orbital's market capitalisation falling below the
    cut-off point of $US50 million.

    The continued listing is subject to Orbital successfully implementing
    the business plan submitted to the NYSE.

    Looking ahead, Mr Piotrowski has forecast a loss of $3.3 million in
    the 2002-03 financial year and a break-even result in 2003-04.

    Mr Gee is more positive, tipping profits of $5 million per annum
    within two years, based on royalty revenue, engineering income and
    its share of Synerject profits.

    "This underpins the existing market value of $55 million providing
    effectively a free option on any success in the automotive sector,"
    Mr Gee said.

    There are currently six manufacturers using Orbital's direct fuel
    injection technology in outboard engines, jet skis and two-stroke
    scooters.

    Mr Cook said that, based on advice from the manufacturers, he expects
    the number of products using Orbital technology to grow from 24
    currently to 32-35 by the end of 2003.

    In the European scooter market, Aprilia, Piaggio and Peugeot have
    released models with Orbital's direct injection technology.

    Orbital expects about 120,000 scooters using its technology will be
    sold this year, double the number of last year.

    Progress has been slower in Asia, with Chinese manufacturer Sundiro
    discontinuing production of a proposed scooter. However, the company
    still sees opportunities in India and Taiwan.

    In the automotive sector, the company suffered a setback late last
    year when Saab suspended a development program that featured
    Orbital's direct injection fuel system.

    However, Orbital is continuing its discussions with five automotive
    groups.

    Mr Gee said General Motors (the owner of Saab) was working on a
    global engine platform and this held much greater potential than
    Saab's stand-alone initiative.

    Orbital's engineering business, which traditionally has been a large
    cash drain on the company, has achieved considerable success in
    obtaining fee-for-service contracts.

    This included a contract with the Federal Government agency
    Environment Australia to test the impact of ethanol mixtures on
    petrol. Mr Cook said this contract was worth "in excess of $1
    million".




    http://www.businessnews.com.au/News.cfm?function=show&NewsID=9693

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