THE light seems to be shining at the end of the tunnel for the Orbital Engine Corporation.
While it posted a $1.9 million loss for 2002-03 that was down considerably on the $26.8 million loss in the previous fiscal.
It is expecting to post a profit in the 2003-04 financial year.
Orbital has announced yet another deal, this time with the Taiwanesere Kwang Yang Motor Company.
It announced to the market that Kymco had “publicly stated” that it was developing Kwang Yang Direct Injection for introduction on certain 100cc and 50cc scooter models.
The KDI incorporates the Orbital Combustion Process.
Orbital managing director Peter Cook said part of the push towards the Orbital-inclusive technology was Taiwan’s tough new emission standards.
Several European scooter manufacturers such as Peugeot are also using Orbital’s technology.
The company also announced that it had met the New York Stock Exchange’s continued listing criteria.
A large part of the turnaround is being attributed to Mr Cook who analysts see as more “commercially focused” than previous managing director Kim Schlunke.
In the 18 months that he’s been at the helm of Orbital Mr Cook has reduced staff numbers, brought costs under control and restructured the company’s balance sheet.
He has also been able to renegotiate the debt the company has to Synerject – a company it owns 50-50 with Siemens VDO.
Orbital also has about $12 million in the bank.
Besides the new management focus, a lot of things seem to be falling into place for Orbital.
The company made inroads into the personal watercraft market in the mid 1990s.
Its injection technology proved successful there and also helped some manufacturers meet tough new environmental standards.
With more countries instituting tougher emission standards, the feeling among some market players is that a few more deals could start falling into Orbital’s lap.
The fact that the engines using Orbital’s technology had fewer warranty claims did not hurt either.
The motorcycle engine marekt is pretty conservative and it wants to see something with a proven track record before it will start to adopt it.
With and its watercraft and now growing scooter experience, Orbital is starting to build that required track record.
Paterson Ord Minnett analyst Robert Gee said there was also talk that Orbital would soon be entering into a relationship with Indian-based parts manufacturer Ucal.
Ucal is 30 per cent owned by a Japanese company and Mr Gee said it was likely the Japanese company would be using the Indian market as a testing ground.
The Orbital Engine Company grew from Ralph Sarich’s invention of the Orbital engine.
However, despite some small takeups by car manufacturers, there was little interest.
The company found a way to a wider market through its fuel injection technology, which as proved a boon for various engine manufacturers.
