12/23/2016Redflex Losses Expected To Mount In 2017
Scandals and increasing distrust of automated ticketing machines ensure Redflex will continue to lose money in the new year.
Financial troubles will continue to plague Redflex well into the new year. In a statement today to Australian investors, the scandal-plagued photo ticketing firm warned that losses would continue to accumulate over the next six months.
"The above is primarily driven by... a number of contract terminations in the United States," the company explained in an Australian Securities Exchange notice. "Our contract renewal rates remain strong and the terminations are generally the result of the cessation of the photo enforcement program in a particular locality, not losses to our competitors. Continued negative public sentiment means that the US photo enforcement market continues to be a low/no growth market."
Gross revenue for Redflex is expected to drop eight percent from $65.2 million to $60 million in the first half of fiscal 2017. Earnings before depreciation, amortization, impairment, finance costs and tax will likely plunge fifty-six percent from $11.4 million to just $5 million. The company has not been profitable since it was caught up in a massive corruption scandal.
Karen L. Finley, the company's former head of US operations, must turn herself in to a federal prison by January 3, where she will wear prisoner number 73067-061. An ongoing a federal lawsuit filed by Chicago, Illinois over the company's fraudulent claims threatens a $383 million judgment that would wipe out Redflex assets.
As if that were not enough, Redflex leaders complained of slow movement on photo ticketing contracts in Asia and the Middle East. Revenue from the UK has also dwindled. The company continues searching for opportunities to shift away from automated ticketing.
"Photo enforcement is an important part of our business and to reduce our reliance on it we will continue to diversify into other products and geographic markets where there is strong demand," the company statement explained.
Over the past decade, Redflex has fallen from an up-and-coming stock worth $4.15 a share to a mere 35 cents per share. Shareholders rejected an offer that would have bought out Redflex for $305 million in 2011. Now the company's market value is a mere $38 million.