BUSINESS

Westport Innovations signs engine development deal with India's Tata Motors

10/30/2012 10:07 EDT | Updated 12/30/2012 05:12 EST
VANCOUVER - Shares of Westport Innovations Inc. (TSX:WPT) fell nearly 15 per cent on Tuesday after the company cut its revenue guidance for the year.

After the close of markets Monday, Westport cut its expectations for revenue growth this year to about 30 per cent compared with earlier expectations for 50 per cent.

The Vancouver-based company makes technology for natural gas engines.

It now expects revenue to come in between $340 million and $350 million, down from earlier guidance for between $400 million and $425 million.

The company earned $264 million in revenue in 2011.

CIBC analyst David Galison cautioned that while the company lowered its guidance for 2012, investors may also lower their expectations for 2013.

However, Galison maintained a US$35 price target on the stock on Tuesday as he noted the company is moving ahead with the launch of a new heavy duty engine next year.

"We expect sales and equity income to continue to increase once the HPDI engine is launched in 2013," Galison wrote in a note to clients.

"We believe Westport's large cash position will support the company until demand recovers."

On Tuesday, Westport also announced a deal with India's Tata Motors to develop an engine for light- and medium-duty trucks and buses.

Westport develops engines that use fuels such as compressed natural gas, liquefied natural gas, hydrogen and renewable natural gas fuels such as landfill gas.

"This is a great opportunity to work with India's largest engine manufacturer in a fast-growing marketplace demanding cost-effective and environmentally conscious solutions," said Westport executive vice-president Nicholas Sonntag.

Commercialization is expected to follow the development phase, with Westport supplying key natural gas engine components.

Tata Motors is India's largest automobile company, with operations in Britain, South Korea, Thailand, Spain and South Africa as well as India. It is also the world's fourth- largest truck and bus manufacturer.

Westport is to release its financial results after the close of markets on Nov. 8.

The stock closed down $4.08 at $24.19 on the Toronto Stock Exchange.