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Welcome to Orbital's web-site, and to
the "From the CEO" newsletter.
Firstly, my best wishes to all for the New
Year.
Since my last newsletter I have had the opportunity
to meet with many of our key existing, and developing customers
around the world. My take from these meetings confirms our expectations
of 2009 as being both a year of challenges and of opportunities.
Customers trading conditions in the US, Europe
and Japan are tough which impacts our consulting engineering work
as well as reducing our revenue from Synerject (our JV with Continental
AG) . Many of these customers are suggesting tough times throughout
2009. For the year 2009, we will manage our business and costs carefully
to ride out the current financial crisis. On the positive side,
we are developing and delivering new opportunities that will expand
our markets. The current worldwide crisis will have a near term
effect. As announced in our December guidance, we expect a loss
for the first 6 months, and for the full year. The good news is
we have a reasonable cash position, allowing us to support our existing
business and continue pursue expansion. This should have us in a
strong position when stability and confidence returns to the market.
To counter market challenges for our engineering
service business, we are implementing new approaches to win additional
work. Already in the New Year, we are seeing positive results from
these approaches, with significant engineering work being awarded
from China and South America. We recently won a new program with
Sygma Motors for an application of our FlexDITM system to large
commercial engines designed to operated on Ethanol fuel. Our new
customer, Sygma Motors, has stated that Orbital's FlexDI applied
to in-cylinder injected Ethanol engine applications has the potential
to deliver the best technology choice for; performance, fuel economy
and emissions. This program is part of our alternative fuel growth
strategy and expands the FlexDI™ application range. For more
information on this program, please go to our web-site:
www.orbitalcorp.com.au/orbital/investorinformation/news/090209.htm
For more background related to the Sygma customer program, reference:
www.vale.com/vale_us/cgi/cgilua.exe/sys/start.htm?sid=274&infoid=2513
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Orbital’s New Single Cylinder Heavy
Duty Engine Test Facility
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Our growth strategy, as presented at the AGM,
in the alternative fuel and energy management areas remains unchanged.
We are actively pursuing discussions in these areas, as whilst the
financial crisis takes the immediate headline news, Global Warming
and Greenhouse Gases remain a critical agenda item for individuals,
companies and governments around the world. The newly sworn in President
of the United States, Mr Barrack Obama, has made the environment
an important part of his proposed agenda to improve the USA economic
situation. Initiatives with alternative fuels are part of this agenda.
Here at home, the Australian Government has now released the key
proposed details and implementation dates for carbon trading in
Australia. Yes, fuel costs today are low, down to US$45 per barrel,
however this largely reflects the reduction in consumer demand,
I feel that this is a temporary situation and does not negate the
fact that crude oil reserves will continue to diminish over time.
The necessity to implement economical alternative fuel alternatives
is still high profile and continues to be a cornerstone for Orbital's
grow plans for the future. We should not forget that Orbital has
unique solutions for alternative fuel that provide our customers
with not only improved fuel economy but more importantly reduced
harmful greenhouse gas emissions. The solutions we offer with alternative
fuels like, Liquid Propane Gas, Natural Gas and Ethanol continue
to promote customer interest around the world.
Orbital recently presented at the recent ASTE
(Australian Academy of Technological Sciences and Engineering) 'Alternative
Transport Fuels for Australia' national symposium in Melbourne.
This event was attended by key industry, research and government
representatives. One focus of the conference was on energy independence.
The conference results call for continued Government support to
expanded use of natural gas for the commercial transport and agriculture
industries and for continued support for LPG (Liquid Propane Gas)
for passenger cars as long as Australia is a net exporter. The full
recommendations can be found at: www.atse.org.au/index.php?sectionid=35.
The ATSE Symposium outcomes reinforce Orbital's alternative fuels
strategy.
Many of my fellow shareholders have contacted
me through our website over the past sixty days expressing their
concern related to the decline in Orbital's share price. My general
response is; Orbital's share price has generally followed the market
and the decline does not appear to be related to a near term change
in Orbital's business situation. Orbital's revenues and profits
are down due to the market situation; however Orbital's cash position
is currently solid. Even with the current challenges, we continue
to have excellent potential to increase shareholder wealth.
I have also received many inquiries regarding
the planned Synerject equity top-up with our partner Continental.
Discussions with Continental continue with the intention to develop
a mutually beneficial arrangement. The open agreement with Continental
does not impact our ongoing business and Continental remain committed
to Orbital as a partner in Synerject and to growing the Synerject
non-automotive business worldwide.
Six months have now passed since I joined the
company. I now have a much better understanding of Orbital's businesses,
culture and prospects. I joined Orbital because I believe that Orbital
has the potential for significant growth and for improved profitability.
The impact of the worldwide financial crisis has not dimmed my spirits
related to Orbital's prospects. The key to success is to offer products
the customer desires, have a good plan, a capable team, and enough
cash to deliver on objectives. Orbital can tick all of these boxes.
The opportunities I saw for Orbital when I joined have been reinforced
over the past six months and new potential opportunities are emerging
every month.
With regards
Terry Stinson
Chief Executive Officer and Managing Director
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