News: Suppliers
19 November 2024
IQE’s flat revenue forecast for 2024 prompts strategic review
In a trading update, epiwafer and substrate maker IQE plc of Cardiff, Wales, UK says it expects revenue for full-year 2024 of about £115m, roughly flat with 2023’s £115.3m (rather than September’s forecast of year-on-year growth, to the lower end of analysts’ forecast of £130–153.7m). “In line with the rest of the industry, we are continuing to see a slower-than-anticipated recovery in key sectors driven by weak consumer demand in end markets,” the firm says. IQE expects this to result in an adjusted EBITDA of at least £5m (up from 2023’s £4.3m, albeit below analysts’ forecast in April of £11.1–16.6m).
“The impact of the slow pace of recovery in the semiconductor industry can be seen across the sector and is reflected in our revenue expectations for full-year 2024,” notes IQE’s executive chair Mark Cubitt.
Strategic review includes considering options for Taiwan operations
IQE’s board remains confident in the firm’s long-term prospects because of its leading position in providing compound semiconductors across several market verticals and to a base of global marque customers. The board believes there is significant value in IQE that is not currently reflected in its market capitalization. Consequently, IQE is to conduct a comprehensive strategic review of its asset base to ensure that it has a strong capital position to further invest in its core operations. The board believes there is a significant market opportunity in IQE’s core operations and remains focused on reducing its cost structure for profitable growth.
In the first instance, IQE will broaden its options in relation to the proposed IPO of its Taiwan operations to include all strategic options, including a full sale. It has retained Lazard to advise on the strategic review, which will be overseen by the board, with input from key stakeholders.
Largest shareholder proposes short-term financing
To help it navigate the ongoing market softness, IQE is negotiating a proposal from its largest shareholder Lombard Odier regarding short-term financing. IQE says that Lombard Odier’s willingness to extend up to about £15m via a convertible loan note with a conversion price of 15p per share is a strong demonstration of Lombard Odier’s confidence in the embedded value within IQE. The firm intends to consult with its other major shareholders regarding the proposed financing.
IQE also continues to have a constructive dialogue with HSBC, and the directors do not foresee the need to raise further equity should these ongoing discussions progress as expected.
“Looking ahead, the strategic review, including the broader assessment of options for our Taiwan operations, will ensure we have a strong capital base to continue investing in our core business and support IQE’s long-term strategy,” says Cubitt. “We are confident in IQE’s long-term prospects and inherent value.”
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