How Westport Innovations Plans to Improve Its Performance

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Dec 29, 2014

Westport Innovations (WPRT, Financial) is trying to tap growth across the globe. For example, its joint venture in China, Weichai Westport, witnessed considerable growth, mainly looking at the entire year-to-date performance and higher unit sales and revenue compared to the previous year. However, the European markets are hit hard by the incentive cut from the government, but India and China look like solid markets for growth.

Westport is continuously adjusting its long-term investments for product development and prioritizing its program spending, depending on the right market timings and partner inclination.

New products will deliver growth

Westport is working closely with major global OEMs and it is believed to continue the development of some top products and natural gas technology.

Westport is completing some key product programs like its futuristic engine for Volvo cars which are believed to deliver significant top line in 2015, moving away from the expense mode.

Westport is witnessing solid interest and engagement from many future partners for co-investing with it on several new programs, which is estimated to minimize the requirement for Westport to invest its own cash and increase its returns.

During the quarter, Westport launched its innovative spark ignition engine, called ESI, which is being shown to several OEMs worldwide in the last few months for developing medium duly focused natural gas vehicles with considerably better performance and higher fuel efficiency over the usual spark ignition engines present in the market today.

Westport has signed several risk-sharing commercialization agreements with key manufacturing partners.

Westport has witnessed ongoing healthy growth in infrastructure development worldwide during the quarter, and there’s considerable growth in the fleet numbers for some natural gas trucks in operation.

Customers are demanding OEMs to increase their natural gas product offerings for matching varied variety and unique features being offered now in gasoline and diesel vehicles.

For On-Road systems, Westport is having some key exhibitions on its Westport iCE PACK LNG tank system having fleets in the U.S. and particularly for companies such as American Protein, which has led to enhanced sales order.

Gaining traction

For this quarter, Westport produced 40 shuttle buses enabled by its WiNG System to the Dallas-Fort Worth International Airport.

Westport is focusing on lean processes and enhancing its cost structures for the applied technology in Italy. There are certain challenging markets worldwide depicting fresh challenges whereas several other markets are expanding.

Russian's OEM GAZ also announced the development of the futuristic CNG Euro-5 vehicle which is an innovative CNG YaMZ-534 developed in cooperation with Westport.

Further, GAZ has assigned Westport for supplying their LPG system for their innovative GAZelle vehicle expected to meet the Euro-5 emission standard requirements.

Westport started the production and delivery of Westport WP580 Engine Management System controller in the U.S., specialized in aftermarket natural gas powered engines.

Westport is ready to ship the Weichai Westport HPDI 12-litre engine in China leveraged in heavy duty trucks produced by Shaughnessy Heavy Duty Automotive.

The company’s complete portfolio of technology including Westport HPDI and improved sparked technology offers superior performance vehicle developers to deliver natural gas products.

Conclusion

However, Deutsche Bank's analyst Vishal Shah cut his rating to Hold from Buy for Westport Inc. owing to healthy long-term growth prospects for the company but poor near-term factors to pull the stock higher. But, considering Westport's addressable opportunity and scope for growth, the company looks like a good bet.