News

24 March 2009

 

IQE posts a fourth consecutive year of double-digit revenue growth  

In preliminary results for the year ended 31 December 2008, epiwafer foundry and substrate maker IQE plc of Cardiff, Wales, UK has reported revenues of £60.5m (up 21% on 2007’s £50.1m), despite difficult economic conditions. The Group delivered quarter-on-quarter revenue growth for the first three quarters of the year, until the global recession made an impact during the final quarter. IQE says the growth was principally driven by high speed wireless communications, 3G mobile devices, and optical products for fibre optic communications.  

“IQE’s continued growth during 2008 was driven by the increasing demand for GaAs based components for high speed, feature rich mobile devices that demand the high levels of performance and functionality that our products deliver. Whilst all sectors are currently suffering as a result of the global recession, it is “smartphone” products which are widely expected to be amongst the first to resume high growth once confidence returns to world markets,” says Drew Nelson, IQE’s CEO.

Gross profit increased to £11.8m, up 43% on £8.2m in 2007, while earnings before interest, tax, depreciation and amortization (EBITDA) more than doubled to £8.4m (before exceptional items), against 2007’s £3.9m. Underlying operating profit increased to £4.0m, compared with £0.6m for 2007. Conversion of EBITDA into cash generated from operations grew from £2.0m in 2007 to £8.5m.

IQE achieved positive free cash flow of £0.7m (2007: outflow £7.1m), even after a £7.8m investment in capital items, marking the completion of a major capital investment programme. Following this completion, the investment in infrastructure in 2009 is expected to be minimal. This is expected to result in a significant improvement in free cash generation in 2009.

Exceptional charges of £3.9m were incurred in completing the relocation in November 2008 of the Singapore business to a new manufacturing facility (£2.5m) and Group streamlining. Retained profit (before exceptional charges) was £2.5m, against a loss £0.4m in 2007, while after the impact of the exceptional items, total retained loss was £1.4m, compared with 2007’s £0.9m loss.  

IQE’s net end of year debt was £18.1m, an increase on the £14.2m recorded at the end of 2007. Net asset value increased from £23.0m to £30.2m during 2008.

During Q4, IQE restructured its activities and operations to reduce its operating costs in order to prepare for the challenging market conditions ahead. This involved a 16% reduction in headcount, some short time working arrangements, and temporary pay reductions. As a result the Group incurred an exceptional charge of £1.4m.  

In its trading outlook, IQE says that there are signs that inventory reductions are coming to an end after a slow first quarter, with indications that demand will start to increase in Q2/2009, as inventories stabilise and customer pulls return to actual consumption levels. The firm expects the wireless market, particularly the smartphone segment, to resume growth during the second half of the year driven by the significant roll out of 3G and other high speed wireless applications. Furthermore, products such as CPV solar cells are expected to generate meaningful revenues during the second half. However, IQE anticipates a decline in first-half 2009 revenues compared with the second half 2008.   

“Whilst it is anticipated that revenues during the first half of the year will be adversely affected by the global recession, we are seeing evidence that growth will resume in H2 2009 and that our exciting and innovative range of new products to address the global emphasis on energy efficiency is expected to contribute strongly to Group revenues in the latter half of 2009,” said Nelson.  

See related items:

IQE reports 20% growth in 2008, despite Q4 inventory reductions

IQE formally opens new Singapore plant

IQE reports growth in sales and profit

See: IQE Company Profile

Search: IQE Epiwafers Substrates

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