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6th December 2004
ORBITAL COMMERCIAL UPDATE
AND FORECAST
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PERTH,
AUSTRALIA: Orbital Corporation Limited today announced that it expected
to return to profit in the six months ending June 2005 following
an improved performance across most of its businesses. The improvement
is underpinned by recent contracts in powertrain consulting and
a range of actual or planned product launches in the northern hemisphere
by its licensees.
Product
Releases
Orbital
confirmed the release of the Suzuki Katana 50cc direct injection
scooter in Europe. This is the first Japanese branded product utilising
Orbital's patented combustion technology, OCP to be released to
the market. The scooter's 50cc DI engine is supplied under licence
by Aprilia.
Kymco,
the Taiwanese motorcycle manufacturer, has also advised that they
will commence their initial release to selected dealers of their
100cc direct injection scooter, from December 18th 2004. This is
Kymco's first product release incorporating OCP and will be the
largest displacement OCP scooter engine in the market, providing
additional consumer choice.
Significantly,
Piaggio/Aprilia have also advised of model upgrades or new models
recently introduced to their dealers for the new model year, including
the Gilera Race Replica 50cc scooter and the new NRG Purejet under
the Piaggio brand and the Sr 50 R Factory, replacing the popular
SR 50, from Aprilia. Piaggio recently announced the acquisition
of Aprilia and Orbital is encouraged by the new management's commitment
to the product class and technology demonstrated by these introductions.
Orbital's
technology has recently been further developed for the marine sector,
to allow the use of alternate heavy fuels in addition to gasoline
capability. Two models have recently become commercially available
including the Mercury Heavy Fuel Outboard, based on the Optimax
Racing 250XS, capable of running on both gasoline and JP5 and a
50hp engine supplied by E.P.Barrus (UK) capable of running on F44,
F34, JP8 and diesel as well as conventional gasoline. Barrus is
the largest UK distributor for Mercury Marine and represents a number
of other outboard engine OEMs. Their product is based on the Tohatsu
50hp engine. These engines are expected to find markets beyond their
initial development application with a number of commercial users,
including rescue operators who favour the use of less flammable
fuels.
Additionally,
Tohatsu have advised of their intention to extend their range of
OCP based DI outboard engines in the 2005 model year.
Powertrain
Engineering Consulting
Since
July 1st Orbital has secured over $6.5 million of engineering contracts.
The contracts cover projects including:
· A complete automotive calibration/emissions upgrade
· A direct injection management system for 4-stroke two wheeler
applications
· Engine calibration and testing
· A number of OCP application programs
· Government vehicle testing programs.
These
contracts together with other anticipated programs are expected
to produce a solid second half for F2005.
Research
and Development
Considerable
scope appears to exist for OCP to be applied to multiple fuel engines,
including heavy fuels and bio fuels, as evidenced by the recent
commercial introduction of the technology on two marine models.
Additionally, there is extended interest in the development of gaseous
direct injection systems including for hydrogen and compressed natural
gas (CNG), with obvious greenhouse emission advantages and with
improved performance liquefied petroleum gas (LPG) engines.
Orbital
is also working on a second generation of OCP DI, to provide a reduced
cost system for single cylinder applications.
Outlook
At
the Company's AGM in late October, Orbital advised of an operating
loss for the six months to 31 December 2004, currently forecasted
in the range of $1.5 to $1.9 million. The loss has resulted from
a combination of poor volumes in both the European scooter market
and in the personal watercraft market as well as a delay in powertrain
engineering orders which was not corrected until the end of the
first quarter. The improvement in powertrain engineering orders,
referred to earlier, is expected to improve revenue in the second
half of F2005. This, together with Synerject's typically stronger
second half result and an upturn in royalties from both improved
market conditions and new model availability, is expected to result
in Orbital returning to profit in the second half.
Orbital's
most significant new licensee, Bajaj Auto in India, has advised
that it is still on plan to introduce its new OCP autorickshaw by
December 2005. This introduction, along with other anticipated model
introductions, suggests that the soft conditions prevalent in the
first half of F2005 should not be expected to be carried into F2006.
The Bajaj program is well advanced and to date has met all management
milestones.
Forward
Looking Statements
This
release includes forward-looking statements that involve risks and
uncertainties. These forward-looking statements are based upon management's
expectations and beliefs concerning future events. Forward-looking
statements are necessarily subject to risks, uncertainties and other
factors, many of which are outside the control of the Company, that
could cause actual results to differ materially from such statements.
Actual results and events may differ significantly from those projected
in the forward-looking statements as a result of a number of factors
including, but not limited to, those detailed from time to time
in the Company's Form 20-F filings with the US Securities and Exchange
Commission. Orbital makes no undertaking to subsequently update
or revise the forward-looking statements made in this release to
reflect events or circumstances after the date of this release.
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