Traffic Technologies (ASX: TTI) has secured a contract with Ausgrid that could help counteract the company’s expected net loss after tax of approximately $13.4 million for the past financial year.
In a statement to the market this morning, Traffic said it has been awarded a three-year contract with a further two-year option to supply LED streetlights and associated hardware to the Ausgrid Operator Partnership in New South Wales “in support of their capital work and maintenance programs”.
The deal is likely to deliver a revenue boost for Traffic after it reported “generally poor trading conditions” and supply chain difficulties in June this year, as a result of COVID-19.
At the time, the company said current conditions were challenging but “a number of significant orders in the lighting sector are expected to contribute to a stronger start to the 2021 financial year”.
More specifically, the deal means Traffic will supply indicative volumes of around 30,000 instances of pedestrian category street lighting, 30,000 vehicle road lighting and 4,000 LED floodlight luminaries over the next five years.
Currently, Ausgrid provides public lighting services to almost 2 million homes and businesses across Sydney, the Central Coast and the Hunter regions of NSW.
According to the company, it installs and maintains approximately 260,000 streetlights within its network with around 25% of all its products utilising LED technology.
Ausgrid is responsible for procuring, installing and conducting scheduled and unscheduled maintenance on its wide array of logistics products with Traffic Technologies now contracted to assist Ausgrid in its operations.
Volumes forecast to increase “significantly”
Traffic Technologies claims to be Australia’s premier traffic company, providing innovative and cost-effective solutions to the traffic industry.
Formed in 2004 and listed on the Australian Securities Exchange in 2005, the company has gradually established a dominant market position through its technical products, signage division and traffic controller operations – operated under distinct brands Aldridge, Deneefe, QTC and TST.
Traffic stopped short of publishing the expected revenue impact of its deal with Ausgrid and said it was not possible to provide an estimate of the value of the contract but it is expected to be a “significant opportunity” for the company over the coming years with expectations that “volumes will increase significantly” based on Ausgrid’s future plans.
“We are proud to announce this significant contract with Ausgrid following an extremely comprehensive and technical tender process,” Traffic Technologies managing director Con Liosatos said.
“We look forward to working with Ausgrid in delivering state of the art lighting and the development of innovative technology for the future.”
“The award of this contract follows on from the company’s success in supplying LED streetlights for use by state road authorities and local councils across the eastern states of Australia,” he added.
Lighting for all
Lighting in public areas is currently undergoing a technological upgrade across Australia with older, less energy-efficient lights being systematically replaced by LED alternatives to improve energy efficiency and deliver a more sustainable public lighting service with a lower carbon footprint.
LED luminares are to be used as the default luminaire type for all new and replacement lighting on the Ausgrid distribution network.
“The LEDs will be connected to Ausgrid’s low voltage distribution network and will be mounted on steel or concrete poles or steel or aluminium street lighting brackets on timber poles,” the company said.