IQE PLC Trading Update
21 Giugno 2019 - 8:00AM
UK Regulatory
TIDMIQE
IQE plc
Cardiff, UK. 21(st) June 2019: IQE plc (AIM: IQE; "IQE", the "Company"
or the "Group"), the leading global supplier of advanced wafer products
and materials solutions to the semiconductor industry, provides the
following trading update ahead of the financial close for H1 FY2019.
IQE expects to deliver revenue of GBP65m to GBP68m for the first half of
FY2019 (consensus GBP68m). As previously guided, the first half of 2019
has been impacted by a weak smartphone handset market, particularly
affecting the Wireless Business Unit. In addition, IQE has also
experienced a reduction in Indium Phosphide laser revenues for the
datacom market due to a customer specific issue outside of IQE's
control. This has been partially offset by new qualifications and
revenue streams coming into production at our Taiwan facility where we
have invested in capacity and which offer increased customer
diversification.
IQE announced on 2(nd) May 2019 that it's recently constructed Newport
Mega Foundry received its first mass production order from its leading
existing VCSEL customer. This has had a beneficial impact on Photonics
revenues for May and June in line with previous guidance.
On 24(th) May 2019 IQE announced, as a response to external
geo-political uncertainties, that the Group may experience some delay to
orders and the potential for adjustment of supplier managed inventory
levels, predominantly in its Wireless Business Unit.
IQE is operating in an increasingly cautious marketplace and has very
recently received a reduction in forecasts from a number of chip
customers, in Wireless and also in Photonics, impacting anticipated
revenues for the second half of FY2019.
As a result of the above and with the expectation that uncertain market
conditions will continue in the short-term, IQE now expects to deliver
revenues in the range of GBP140m to GBP160m for FY2019 at prevailing
exchange rates (consensus GBP175m).
This is a larger impact than the previously guided risk related
specifically to Huawei, due to the far-reaching impacts on other
companies and supply chains that are now becoming evident.
Photonics
The Group issues revised constant currency (USD) guidance for the
Photonics segment which it now expects to grow by less than 30% year on
year (previous guidance of over 50%)
Strong progress continues to be made at our Newport Mega Foundry for
VCSEL production. Four reactors are currently in mass production with
the first major customer. Two further customers are expected to enter
mass production in H2. Sampling continues with an additional 13
customers as part of ongoing qualifications which provide breadth of
exposure to global supply chains. The company remains confident that it
will continue to show strong revenue growth in the Photonics business
through customer diversification in 2020 and beyond.
Whilst the outlook for Indium Phosphide lasers remains challenging in
the short term, IQE is engaging with several new customers who are
forecasting growth, as global supply chains adapt to current conditions.
IQE is in the final stages of qualification for a significant
opportunity for full service 10G Distributed Feedback (DFB) laser
production, with revenues anticipated in Q4 FY2019. In addition, major
progress has been made in developing next generation 25G full service
DFBs for high speed datacoms, hyperscale datacentres and 5G.
Wireless
IQE issues revised constant currency (USD) guidance for the Wireless
segment which it expects to decline by 20% to 25% year on year (previous
guidance of a decline of 15%).
The Group is witnessing significant global supply chain shifts that are
affecting short-term revenues from Power Amplifier products, but is
engaged in initial production activities with two key Asian customers
who stand to benefit from significant additional volumes in the
medium-term, with the anticipation of H2 2019 revenues from these
customers.
In H1 2019, continued strong progress has been made in the research and
development of the unique 5G RF Filter Materials Portfolio based on our
patented cREO technology and we remain actively engaged with several
chip customers to bring this product to market.
Infra Red
Constant currency (USD) guidance for the Infra Red segment remains
unchanged at 15% year on year growth. This segment continues to perform
strongly and provides a source of stability and customer diversification
to IQE's portfolio.
Adjusted Operating Profit
Given the reduction in expected revenues, IQE expects to remain
profitable in 2019 but with Adjusted Operating Profit margin
significantly below the previous guidance of over 10%.
Whilst the company's cost base is largely fixed in the short-term, IQE
is taking steps to reduce costs and avoid non-critical capital
expenditure. This includes the acceleration of the assessment of
strategic projects to optimise the company's global manufacturing
footprint. Active management of all cashflows will ensure the company
remains within the limits of its current revolving credit facility in
2019.
Outlook for 2020
IQE remains cautiously optimistic about growth opportunities for 2020
and as global supply chains adjust we expect that the significant market
drivers such as 5G, connected devices and LIDAR will regain momentum.
IQE remains in a very strong position to capitalise on this with its
unique breadth and depth of products, global production capacity and
intellectual property. The steps being taken by the Group to adapt and
manage through this period of uncertainty will ensure it is well placed
to grow revenues and expand margins in the eventual rebound cycle.
Dr Drew Nelson, Chief Executive of IQE, said:
"These are unprecedented times for the global semiconductor industry as
geo-political conditions affect interconnected global supply chains. It
is now clear that the impact of Huawei's addition to the US Bureau of
Industry and Security's Entity List is having far-reaching and
long-lasting impacts on global supply chains. This is a matter outside
of IQE's control but we have responded swiftly to leverage our breadth
of relationships and to pursue new sales opportunities. We are also
taking prudent expenditure actions in order to manage through this
period of uncertainty. IQE remains well placed to adapt to mid -
long-term share shifts at both the component (chip) and the OEM level.
Indeed, we are now seeing increasing activity from customers in
alternative supply chains across our business units as these supply
chains respond to current market dynamics. We anticipate significant new
customer qualifications during the second half of 2019 as a result. As
global markets adjust and recover, we remain extremely well placed for
significant future growth."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this announcement,
this inside information is now considered to be in the public domain.
CONTACTS:
IQE plc
Tim Pullen
Drew Nelson
Chris Meadows +44 (0) 29 2083 9400
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Canaccord Genuity (Nomad and Joint Broker)
Simon Bridges
Adam James + 44 (0) 20 7523 8000
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Peel Hunt (Joint Broker)
Edward Knight
Nick Prowting +44 (0) 20 7418 8900
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ABOUT IQE
http://iqep.com
IQE is the leading global supplier of advanced semiconductor wafers that
enable a diverse range of applications, supported by an innovative
outsourced foundry services portfolio that allows the Group to provide a
'one stop shop' for the wafer needs of the world's leading semiconductor
manufacturers.
IQE uses advanced crystal growth technology (epitaxy) to manufacture and
supply bespoke semiconductor wafers 'epi-wafers' to the major chip
manufacturing companies, who then use these wafers to make the chips
which form the key components of virtually all high technology systems.
IQE is unique in being able to supply wafers using all of the leading
crystal growth technology platforms.
IQE's products are found in many leading-edge consumer, communication,
computing and industrial applications, including a complete range of
wafer products for the wireless industry, such as smartphones and
wireless infrastructure, Wi-Fi, base stations, and satellite
communications; optical communications, optical storage, printing,
thermal imagers, leading-edge medical technologies, automotive and
aerospace technologies, a variety of advanced silicon based systems and
high efficiency concentrator photovoltaic (CPV) solar cells.
IQE is headquartered in Cardiff UK and operates multiple manufacturing
and R&D facilities worldwide.
(END) Dow Jones Newswires
June 21, 2019 02:00 ET (06:00 GMT)
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