Velan releases financial results, announces cost reduction initiatives
International industrial valve manufacturer Velan has published its financial results for its first quarter, ended 31 May, 2017.
The Montreal headquartered company announced sales of $71.1 million for the period, with net new orders of $72.2million. The company had an order backlog of $456.6 million at the end of the quarter, of which US$168.1 million is scheduled for delivery beyond the next 12 months. The company recorded net cash of $61.6 million.
Announcing a net loss of $4.3 million for the quarter, Velan has accelerated the assessment of its global manufacturing footprint, supply chain and cost structure as part of its Velocity 2020 strategic plan. This has seen the company launch a global cost reduction and efficiency initiative with the aim of reducing annual supply chain, production and overhead costs by approximately $20 million by the end of the fiscal year ended 29 February, 2020.
According to a release from the company, sales were negatively impacted by the lack of shippable backlog, particularly in its North American operations, as well as delays in shipments of certain large project orders caused by “various customer related, supply chain and internal operational issues.” Fierce competition and continued weakness in the oil and gas sector also impacted sales by causing a reduction in shipments of non-project commodity valves. Velan will respond to these challenges by targeting discrete market segments where its engineering know-how and agile design capabilities can be a leverage for future growth.