Orbital lowers guidance on production delays

Industrial technology company Orbital Corporation has lowered its revenue guidance for the financial year by $4 million, following production delays to one of its new engine models.

At its 2018 annual general meeting in November, Orbital had a revenue guidance of $24 million for the 2019 financial year.

Founded by Ralph Sarich, Oribtal currently develops engines and related products for unmanned aerial vehicles.

Its main client is Insitu, a subsidiary of Boeing.

In an update to the ASX today, the company said it had revised its revenue guidance for this financial year to $20 million, after the start of production for its two of engines for Insitu UAVs was pushed back from the second quarter of this financial year to the third.

The first of its modular propulsion systems for Insitu UAVs is still on track to begin production this financial year, with the second and third propulsion systems scheduled to begin production next financial year.

In a statement, Orbital said its long-term agreement with Insitu to provide the UAV engines and propulsion systems has a potential value range of between $150 million and $350 million.

It said the production delay would affect this figure.

Orbital managing director Todd Alder said delivery of the targets set out within the agreement with Insitu remained the company’s core strategic focus.

“This is a significant period of development and advancement for Orbital UAV and we continue to invest in our business’s near-term growth through internal capacity expansion and continued internal capability improvements,” he said.

“With two world-class production facilities in Australia and the US now operational, a five-year LTA worth up to $350 million with Insitu, and five engines scheduled for production in FY20, our business growth strategy remains firmly on track.”

Shares in Orbital were flat at 38 cents each 1.10pm AEDT.