KEY POINTS:
A development deal with Panasonic puts Wellington Drive Technologies on track to secure orders for millions of its electronic motors, says managing director Ross Green.
NZX-listed Wellington Drive has signed a memorandum of understanding with Panasonic Refrigeration Devices Singapore, one of the world's largest makers of refrigeration compressors.
Panasonic, which makes about 18 million compressors each year, will pay Wellington Drive to develop its high efficiency motor, electronics and software for use in Panasonic compressors used in home appliances.
Green said the company had been working on the relationship with Panasonic for years and assuming continued good progress, the commercial returns could be substantial.
"The plant we're working with at the moment makes 11 million units a year and over time the clear intention is that our motors end up in most of those," Green said.
"The returns we make are in the order of dollars per unit, not cents per unit."
But it would take several years before Auckland-based Wellington Drive achieved very large order numbers with Panasonic.
The contract, which delivered a good level of engineering income, was expected to be completed by the second quarter of next year with the delivery of production-ready equipment for full testing.
Wellington Drive expected to be profitable during the second half of the 2008 calendar year, with substantial prospects for profit growth.
"We've got a number of other opportunities like this that are in negotiation. We're hoping that over the next 12 months or so we'll be coming out with news about them as well," Green said.
Wellington's shares closed up 8c yesterday at 47c.
The company's motors can reduce weight by up to three-quarters and in the case of the motor being developed for Panasonic, cut annual electricity bills by about 40 per cent.
The electronic motor and software enable the delivery of power to be mapped and controlled.
Under high production order numbers the high-efficiency motors could also be made at a similar cost or cheaper than conventional designs, Green said.
Last month Wellington won its single biggest order to date for 400,000 motors from a refrigeration manufacturer in North America.
The environmental debate was raising the profile of Wellington Drive's products, Green said.
"The whole question of saving electricity is starting to become important for people who buy home appliances, there's no doubt about that."
Wellington Drive employs 72 people.
