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(Alliance News) - British semiconductor company IQE PLC on Monday lowered its annual revenue forecast and said that it will post a mid-single digit adjusted operating loss for 2019.
IQE shares in London were trading 21% lower at 51.92 pence each in London on Monday morning.
"A mid-single digit adjusted operating loss is now expected resulting from revenues being slightly below the previous guidance range, additional one-off commissioning costs at the new foundry in Newport, general diseconomies of scale associated with operating at low volume in some sites and the inclusion of losses for the Singapore CSDC entity as announced in October," IQE said.
The Cardiff, Wales-based company now expects to deliver revenue of between GBP136 million and GBP142 million for 2019, compared to previous guidance range of GBP140 million to GBP160 million, including a foreign exchange tailwind of around GBP3 million.
In 2018, the company generated revenue of GBP156.3 million and adjusted operating profit of GBP16.0 million.
The company, which supplies wafer products to the global chip manufacturing companies, said its Photonics division has made good progress in 2019, but the Wireless division has encountered continued low order volumes and reductions in inventory by major chip customers in the US.
IQE further said that it has taken steps to reduce costs and 2019 capital expenditure is expected to be at the bottom end of the GBP30 million to GBP40 million guidance range and net debt to be between GBP15 million to GBP20 million.
For 2020, IQE expects its first-quarter to be seasonally weak. Beyond the first three months, IQE remains cautiously optimistic about returning to growth.
"IQE has experienced very challenging market conditions in 2019. Shortfalls in revenue relate predominantly to two major customers, with whom IQE is confident it has not lost share and who remain very well positioned for returns to growth in 2020. Indeed, the company remains well positioned to capitalise on an expanding future compound semiconductor market opportunity driven by the macro trends of 5G and connected devices," said IQE Chief Executive Drew Nelson.
By Tapan Panchal; tapanpanchal@alliancenews.com
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