Wellington has received notification from an existing motor customer that as a result of a sourcing initiative undertaken by that customer Wellington has not been selected as their primary motor supplier. The customer is a beverage brand that specifies motors, rather than a direct purchaser from Wellington.
Wellington’s 2019 financial guidance remains unchanged with revenue flat to slightly up when compared to 2018 and for EBITDA and EBIT to be higher in 2019 when compared to 2018.
Wellington estimates annual negative volume impact of 300,000 motors, over the remainder of 2019 and into 2020, with the majority of motors being legacy ECR92 and ECR01. While the customer decision was only communicated this week, the potential outcome was not unexpected, and had already been factored into the company’s forecast and previous guidance.
CEO Greg Allen commented “the customer decision reflects a shift in Wellington’s motor business away from high volume, low priced legacy bottle cooler motors. This reinforces the company’s strategy to focus on its ECR2 motor platform for adjacent markets such as supermarket displays and food service, and to continue to invest heavily in its rapidly growing ‘Wellington Connect’ IoT business.”