Wellington Drive Technologies (Wellington) is closely monitoring the impact of 
the 2019 Novel Coronavirus (nCov) on its supply chain operations. Wellington 
supplies motors and IoT hardware to customers that are manufactured by its 
supply partners East West Vietnam and Match-Well China. 

The company’s supply chain is global in nature and components that suppliers 
need for production are sourced globally, and from across Asia, including 
China, which is the predominant or sole source of certain componentry. As a 
result of the nCoV emergency and measures put in place in China by local and 
central government, Wellington is expecting an impact on product supply. This 
is due to government restrictions on factory openings, restrictions in movement 
of people and port and logistics facility closures.

Some known impacts are as follows: 

-- Wellington’s East West Vietnam factory is open; however, production will be 
impacted by China-sourced component supply shortages. 
-- Wellington’s China-based supplier, Match-Well, had its post New Year factory 
opening delayed by local authorities. As of February 11th, the factory 
partially opened with reduced staff. Several China-based component suppliers 
for Connect SCS and ECR2 motors remain closed with minimal visibility on 
opening dates and supply recovery plans; 
-- Chinese ports and shipping companies have restricted throughout. There is 
limited feedback from these Chinese ports and customs departments on incoming 
and outgoing deliveries or release of shipments currently in transit. Logistics 
generally across the Asia region are being delayed by related restrictions; 
and, 
-- There are significant constraints put on movement of people and goods 
between Chinese provinces and within cities; couriers and deliveries have been 
restricted, and in some cases cancelled.
 
Wellington is in the process of switching more production to East West’s 
Vietnamese factory until products can resume shipment into and out of China. In 
addition, the company is working with alternate sources for some components to 
mitigate some of the supply risk. 

The company has implemented travel restrictions to and within mainland China 
and is reducing international travel generally in order to protect employees. 
It is following travel and health guidance provided by international 
governments and authorities.

2020 forecast 
There are some indications from authorities that factory production in China 
will restart towards the end of February and into March. Initial forecast 
scenarios are being prepared that assume the company is only able to supply 
product from existing inventory until such a time as the China component supply 
chain situation is resolved. Wellington is currently assuming resumption of 
normal production and shipping around the end of
April 2020. 

These initial forecasts indicate a potential risk to revenue of approximately 
US$3.6m (around NZ$6m) from February to April. The company does not expect that 
all of this delayed supply will be perishable, so some catch up later in Q2 
currently appears likely. Forecasting the full loss of this revenue would take 
2020 forecast sales to around NZD$65m, which would be below our existing 
guidance for revenue growth of around 15% over 2019. 

The company will continue to update its forecast scenarios as further 
information about nCoV becomes available. If necessary, Wellington can defer 
planned incremental expansion spending, which would somewhat mitigate the flow 
through impact on the forecast 2020 profit.

2019 results update 
The company expects to release its 2019 results by the end of February 2020. 
There is no impact to 2019 as a result of NCov related issues with revenue and 
profits expected to be consistent with guidance, which was for EBITDA between 
$3.5m and $4.0m and a net profit. 

About Wellington Drive Technologies:

Wellington is a leading provider of IoT solutions, cloud-based fleet management 
platforms, energy-efficient electronic motors and connected refrigeration 
control solutions. It serves some of the world’s leading food and beverage 
brands and refrigerator manufacturers and offers proximity-based marketing for 
Smart Cities to the Australian market. Wellington’s services and products 
improve sales, decrease costs and reduce energy consumption. Headquartered in 
Auckland with a global reach, Wellington is listed on the New Zealand stock 
exchange under the ticker symbol NZ:WDT

For further information visit www.wdtl.com

SOURCE: Wellington Drive Technologies