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UPDATE 1-Westport Innovations loss grows, revenues drop

(Adds comments from conference call)

VANCOUVER, British Columbia, Jan 24 (Reuters) - Westport Innovations Inc. reported a bigger third-quarter loss on Friday, but the developer of alternative-fuel engines said revenues will rebound in its next fiscal year.

The firm said it lost C$12.2 million ($8 million), or 24 Canadian cents a share, for the quarter ended Dec. 31, compared with a loss of C$9 million, or 21 Canadian cents a share, a year earlier.

Revenues dropped to C$5.65 million from C$14.9 million on reduced sales. Westport said the decline was in line with its revised guidance in December and it still sees revenues rebounding as sales pick up in the next fiscal year.

Westport is developing technology to allow diesel engines to run on natural gas in conjunction with U.S. engine maker Cummins Inc. . The engines will produce less pollution than standard compression-ignition engines.

The bulk of the company's current revenue comes from sales of spark-ignition natural gas engines.

Westport had also been working with Ford Motor on developing an engine for lighter-duty vehicles, but that project ended in December after Ford cut spending on research and development.

Westport chief executive David Demers said while he would like to see the effort continue the next step is up to Ford. "We simply are not prepared to fund the program without a substantial long-term commitment from Ford," Demers told a conference call.

Demers said engineers from the project would be shifted to other projects, including one with Isuzu Motors Ltd. to adapt a prototype light duty diesel truck to natural gas.

Westport shares ended down 3 Canadian cents at C$2.57 in Toronto on Friday, near the low end of their 52 week range of C$2.45 to C$9.50.

Demers acknowledged in the conference call he has received complaints about the low share price, but said he is "puzzled" requests from some investors that it cut spending on research and development.