IplayCo Corporation (CVE:IPC) informed investors Thursday that it is taking steps to ensure strong margins in its European expansion ahead of posting its second-quarter financial results next week.
The Langley, BC-based company said in a statement that despite strong demand for its products and services in Europe, the company is expecting to post a loss of US$1.72 million for the period ending March 31, 2019.
"The European operations pushed Iplayco's overall sales higher by more than 35% compared to the same quarter last year, but much of the business came in new product lines where we experienced supply chain inefficiencies from ramping up so quickly,” said Scott Forbes, president and CEO of Iplayco.
According to a statement, Iplayco attributes the loss to a 50% increase in operating expenses coupled with a 25% decrease in gross profit due cost overruns stemming from a new product line.
CEO Forbes acknowledged his “disappointment” at the loss, but assured investors that the company is making strategic moves to ensure that margins in the region improve to bring them in line with strong performance figures from its North American and Asian operations.
“This loss reflects overly aggressive pricing on our part, combined with our European team encountering a particularly steep learning curve,” said Forbes. “Shareholders should be assured these issues are getting my fullest attention.”
The company has replaced its vice president of global operations with a regional vice president based in Europe, adjusted its pricing models, and investing in more training and better project management with the goal to significantly increase sales and margins in the second half of its financial year ending September 30, 2019.
“It is imperative that we adjust quickly to take fullest advantage of the strong demand in Europe for Iplayco's products and services," said Forbes.
Shares of Iplayco fell 20% on Thursday at C$0.52.
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