‘2014 Was a Transformational Year’ as NGV Prospects Remain Strong
With ‘A Resilient Ecosystem of Engines, Vehicle and System Providers’
Westport Innovations logged total segments revenue exceeding $1 billion for the first time in its history in 2014, and the Cummins Westport joint venture likewise set a record mark for sales. 2014 was thus “a transformational year,” the company says, with the total sales figure “a significant milestone for both Westport and the natural gas engine and vehicle industry.
“This establishes natural gas as a global industry with a resilient ecosystem of engine, vehicles, and system providers with the associated service/support, and maintenance capabilities required for a new transportation fuel,” Westport said.
Total segments revenue was $1.1 billion in 2014, “an increase of 15% over the same period last year and a compound annual growth rate of 43% over the past three years,” Westport says.
Cummins Westport Revenues Rose
Cummins Westport segment revenue was $337.2 million on 10,512 units for the year ended December 31, an increase of 9% in revenue compared to the prior year, Westport says. Unit volume increased by 28% year-over-year, “driven primarily by strong growth in trucking and bus applications, which are up 41% and 40%, respectively, over the same period in 2013.”
As a corporation, Westport Innovations posted a net loss of $149.6 million in 2014, compared with $185 million in 2013, an improvement of 19%. “The improvement in net loss,” the company says, “was primarily due to increases in consolidated gross margin and joint ventures’ income, combined with reduction in operational expenses.”
‘The Global Market for Natural Gas Vehicles Is Growing’
“The sudden and dramatic decline in global oil prices in the second half of 2014 caught most by surprise,” Westport says in today’s earnings release: “While this volatility has created challenges in some markets and segments, in most parts of the world, the favorable price differential between natural gas and conventional fuels remains intact.
“The economic fundamentals of natural gas versus petroleum-based fuels are expected to remain strong.”
Put another way, “The global market for natural gas vehicles is growing despite some of the strongest headwinds in years.”
‘Dramatic Growth in Market Presence’
“Despite volatile energy markets in 2014, market interest in alternative fuels continues to grow in many parts of the world,” Westport CEO David Demers said in today’s earnings release.
“Achieving over $1 billion in sales in 2014 highlights the dramatic growth in our market presence and prospects going forward,” he said.
“Given current energy market and global economic volatility, we took significant steps in 2014 to advance our business model as we shift from many years of market creation and product demonstrations to full commercial operation and profitability,” Demers said. “We have prioritized investments and product development efforts to maximize our near term success by focusing on those markets that have the conditions needed for the adoption of natural gas and where we have tangible partner commitments…
‘From Niche to Mainstream’
“Applications like transit and refuse in North America, trucks and buses in China, and taxis and urban delivery vehicles in Europe and South America are already shifting from niche to mainstream.”
Westport outlined four key components of its strategy for 2015:
- continue to invest with committed OEM partners in commercial products for the next decade that contain strong technology content including HPDI 2.0 and enhanced spark ignited direct injection, but defer investments with uncertain market timing or commercialization risk;
- continue to rationalize and consolidate the Westport product portfolio for cost reduction and margin improvement, ensure customer value with leading price/performance, and achieve full system sales, creating and extracting value beyond individual component sales;
- look at non-core asset sales; and
- continue to drive cost efficiencies and reduce global overhead expenses.
Volvo for HPDI 2.0
Westport says it invested $38.2 million in HPDI 2.0, its second-generation high pressure direct injection system for running diesel engines on a high proportion of natural gas. “The lead customer for HPDI 2.0 will be Volvo AB while Westport continues to develop HPDI products with other OEMs,” Westport said.
Westport said too that natural gas vehicle sales through the Ford qualified vehicle modifier (QVM) program were down 1% in 2014, “with challenging headwinds from much lower gasoline prices in the U.S.
“Westport has restructured the business through headcount reduction and facility consolidation to focus on lean operations.”
Contact information is only available to premium subscribers. Click here to purchase a subscription.
Source: Westport Innovations with Fleets & Fuels follow-up