March 1, 2017 / 7:04 PM / 9 months ago

Parrot to pursue profits with commercial drones

(Reuters) - French drone maker Parrot aims to return to profitability by 2018 by expanding its commercial drone business, its finance chief said on Wednesday.

Representatives from the French company Parrot demonstrate a prototype of their new Disco drone at the opening event at the Consumer Electronics Show in Las Vegas January 4, 2016. REUTERS/Rick Wilking

Companies and governments are turning to the unmanned aerial vehicles for everything from monitoring crops to parcel deliveries. Parrot’s commercial drone unit recently signed a partnership deal with Agribotix, which provides drone-enabled technologies for agriculture.

About half of Parrot’s 2015 drones revenue came from the Americas region. The U.S. Federal Aviation Administration expects sales of small unmanned aircraft systems for commercial use to rise more than four-fold to 2.5 million units in 2017.

Pricing pressure from Chinese competitors, particularly from the market leader DJI, makes the market for consumer drones, often used for racing or photography, less attractive. This business accounted for over half the company’s revenue in the fourth quarter.

“Professional drones should generate at least 50 to 60 percent gross margin on the long run where consumer drones cannot generate more than 35 percent of gross margin”, Chief Financial Officer Gilles Labossiere told Reuters.

“We are not running for market share, we are seeking to be a strong number two in the drone industry and we will focus on the segments that will allow us to be profitable,” Labossiere said.

The company’s shares have lost over a fifth of their value since the company announced in January that it would not meet its fourth-quarter revenue target.

After disappointing consumer drones results in 2016, the company expects a strong first half rebound due to product developments and an acceleration of online sales.

Reporting by Manon Jacob and Alan Charlish in Gdynia; Writing by Thyagaraju Adinarayan; Editing by Elaine Hardcastle and David Evans

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