Vmoto's 2Q24 Sales Decline Amid Economic Volatility - August 2024
VMT (VMT) Share Update August 2024 Thursday 1st
Vmoto Reports Significant Decline in 2Q24 Sales Amid Volatile Economic Conditions
Vmoto Limited (ASX: VMT), a global electric vehicle company, has announced a significant decline in its sales for the second quarter of 2024, attributing the downturn to ongoing economic volatility in key markets such as Europe and China.
Instant Summary:
- Vmoto sold 4,167 units in 2Q24, a 50% decrease from 2Q23.
- International unit sales fell by 52% compared to 2Q23.
- Firm international orders of 1,712 units as of June 30, 2024.
- Operational cash flow remained positive despite sales decline.
- Cash position of A$41.7 million and bank operating facility of A$3.3 million.
- Construction of new manufacturing facilities in Nanjing, China on schedule.
- Vmoto invests in Zenion Limited, a UK-based last mile delivery service.
2Q24 Sales Performance
Vmoto Limited reported that it sold a total of 4,167 units in the second quarter of 2024, marking a 50% decline compared to the same period last year. International sales were particularly affected, with a 52% drop to 2,318 units. The company attributes this decline to the challenging economic environment in Europe and China, which has dampened consumer spending and investment.
Despite the decrease in sales, Vmoto maintained a positive operational cash flow during the quarter, thanks to focused cost control and optimization of prepayments for inventory. The company closed the quarter with a cash position of A$41.7 million and a bank operating facility drawdown of A$3.3 million.
Financials and Orders
As of June 30, 2024, Vmoto had firm international orders for 1,712 units, scheduled for delivery in the third quarter. The company received significant interest from B2B customers, particularly for its CPX, VS3, and Citi products, which are popular in rental and delivery operations.
Vmoto's balance sheet remains strong, with a closing cash position of A$41.7 million. The company has drawn down RMB 16 million (~A$3.3 million) from its unsecured and revolving bank operating facility provided by Industrial and Commercial Bank of China, Lishui branch.
Construction and Investments
The construction of Vmoto's new manufacturing facilities in Nanjing, China, is progressing on schedule and is expected to be completed in the second half of 2025. The new facilities will support the company's long-term growth and operational efficiency.
Post 2Q24, Vmoto invested in Zenion Limited, a UK-based operator providing all-inclusive last mile delivery services. The investment, totaling £497k (~A$970k), will be funded from Vmoto's existing working capital. Zenion has been using Vmoto’s award-winning CPX delivery vehicles for many years, and this strategic investment is expected to strengthen Vmoto's presence in the last mile delivery market.
Outlook
While the current economic climate in Europe continues to impact sales performance, Vmoto remains optimistic about the long-term outlook for electric motorcycles and scooters. The company is actively seeking to mitigate these impacts by expanding into new markets and increasing sales through strategic partnerships. Emerging markets in Asia and South America are expected to drive future sales orders, helping to offset the reduction in European orders.
Vmoto is also focused on developing new products and technologies to support future growth. Recent product launches, including the APD electric motorcycle, CPX Explorer, and Vmoto battery swapping and charging stations, are expected to open new revenue streams and enhance the company's market position.
The significant decline in sales is likely to affect Vmoto's stock price as investors react to the challenging economic conditions and reduced demand in key markets. However, the company's strong cash position and strategic investments in new facilities and partnerships may help mitigate some of the negative impacts.
Investor Reaction:
Analysts are expected to have mixed reactions to the announcement. While the decline in sales is concerning, the company's positive operational cash flow and strategic investments in new markets and technologies may provide some reassurance to investors.
Conclusion:
Investors should closely monitor Vmoto's performance in the coming quarters, particularly its efforts to expand into new markets and develop new products. The company's strategic response to the current economic challenges will be crucial in maintaining investor confidence and driving future growth.